WA jobless rate jumps to 5.7% in July

Western Australia's unemployment rate has jumped to a near six-year high while the national jobless rate holds steady at 5.8 per cent as employers chose to cut employee hours rather than slash jobs, new figures show.

The Australian Bureau of Statistics today said that WA"s jobless rate had risen from an upwardly revised 5.2 per cent in June to 5.7 per cent, seasonally adjusted for July.

The latest WA figure is the highest since December 2003, when it peaked at 5.9 per cent.

Compared to a year ago, WA's unemployment rate has surged from 2.9 per cent.

In July, the state's participation rate fell from June's 68.8 per cent to a seasonally adjusted 68.2 per cent.

The total number of people employed in a full-time capacity fell from 815,000 to 797,300 while the total number of people employed fell from 1.1595 million to 1.1477 million.

Western Australia joins Queensland and South Australia as the only states to record an increase in the unemployment rate with 5.8 per cent and 5.6 per cent respectively.

The jobless rate in New South Wales fell from June's 6.4 per cent to 6.1 per cent, Victoria recorded a 0.2 per cent fall to 5.8 per cent and Tasmania dropped 0.5 per cent to 4.1 per cent.

Australia's unemployment rate was surprisingly steady in July as businesses took a flexible stance toward their workforces and cut back on employee hours rather than slash jobs.

The nation's jobless rate remained at 5.8 per cent, and at the highest level since October 2003, in July from June.

Total employment rose by a seasonally adjusted 32,200 positions, with a rise of 48,200 part-time jobs more than offsetting a fall of 16,000 full-time.

The result was better than market forecasts for a loss of 18,000 jobs in total and the unemployment rate to rise to six per cent.

ANZ economist Riki Polygenis said a shift from full-time to part-time employment in the past 12 months had limited the fall in total employment across Australia.

Over the year to July, full-time jobs fell by 189,400 against an increase of 190,700 part-time positions, the ABS data revealed.

"Employers are choosing to cut back on employment hours rather than cut back on their head count over all to cut costs," Ms Polygenis said.

"That being said, the pace of decline in full-time employment appears to have eased."

Total hours worked fell 2.9 per cent to an adjusted 1.515 billion in July from 1.561 billion the year before.

So while the number of people with jobs in July was virtually the same as a year earlier, the hours worked fell sharply.

But Ms Polygenis said the increase in part-time work disguised the impact on incomes.

"If people are losing work hours then that does negatively impact on household income," Ms Polygenis said.

Deputy Prime Minister Julia Gillard said businesses were better off retaining staff rather than facing the prospect of not having enough skilled workers to meet demand once the economy improved.

"I think employers from past economic downturns have concluded that it can be better for business than losing staff today, only to need to recruit new skilled staff and not being able to find them when the economy turns to growth," she said.

St George Bank chief economist Besa Deda said greater flexibility in the jobs market had supported employers during the economic downturn.

"Anecdotes suggest that wherever possible employers are trying to hang on to their employees; for example, employers are using measures like shortening employees working weeks or having employees go some time without pay," she said.

Commonwealth Bank senior economist John Peters said the domestic labour market had benefitted from the twin stimulus efforts of the Reserve Bank of Australia and the federal government to cushion the economy from the worst of the global downturn.

"The jobs market has held up because sharply lower interest rates and massive federal government spending have lifted incomes and confidence for households and businesses," he said.

Ms Deda said the unemployment rate would likely rise but probably not as severely as forecast in the first half of 2009 nor to the double digit levels seen during the last recession in 1990/91.

Treasury has forecast the jobless rate to peak at 8.5 per cent in 2010/11, the federal budget papers released in May show.

"We are projecting a peak of around 7.5 per cent to eight per cent to occur in the middle of next year," Ms Deda said.