Unemployment, as measured by the Roy Morgan Unemployment Estimate, fell marginally from 7.3% to 7.1% in the December Quarter of 2006. The number of Australians employed in the last three months of 2006 increased by 88,000 to 9,792,000, while the amount of people in the workforce increased by 73,000 to 10,544,000.

The Roy Morgan Unemployment Estimate is obviously much higher than the 4.6% reported by the ABS today but, Henry believes, much closer to reality.

The official rate of unemployment clearly underestimates the real level of unemployment, a fact that Henry has emphasised in the past. Marcus L’Estrange, who finds the misrepresentation of the real level of unemployment such an outrage he calls it “Australia’s Watergate”, also carried out a rigorous debunking of the ABS figure – found here.

This is a crucial issue, as the unemployment rate is used in a wide range of policy making decisions, including everything from setting interest rates to the make-up of our welfare system. Underestimating the rate of unemployed, while it may make the Government look better, simply distorts every Government mechanism.

Despite the real unemployment rate being much higher than the official ABS rate, this graph highlights the downward trend in both the ABS and Roy Morgan unemployment rates. The relative tightness of the labour market can be further seen in another ABS report, released yesterday, which found that job vacancies rose 5.9% in the three months to November.

Henry also notes that the ALP is considering easing its objections to global technology companies accessing government incentives for research and development. This is a non-s-xy but very, very important area of policy that Henry is on record as saying will underpin the next wave of economic reform.

The first country to really get commercialisation of R&D right will have strong advantages in the coming years and decades. We have seen the impact on the Australian economy of drought and the pressure on traditional manufacturing sectors from the emerging Indian and Chinese behemoths and while the resources boom is propping things up, it is masking a greater, deeper problem. Unlike resources, intellectual capital is essentially inexhaustible and Henry applauds any debate on how Australia could best get it right. Henry’s editor, PD Jonson, has been a strong contributor to the national debate on this issue and continues to work towards ensuring Australia takes a place at the global innovation and commercialisation table.

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