Work: nice to have. But not all the time.

Work. It’s a chore, isn’t it? If Australians can get out of it, they will.

The latest unemployment data are out, and they show this : Labour force participation has fallen to its lowest level since April 2006, and male labour force participation has fallen to its lowest level since records began, 71.0 per cent.

Look at this graph:


Participation counts those working and those looking for work. It excludes those studying, retired, backpacking round Europe, unable to work, etc.

In the short run, labour force participation falls because there are not enough jobs. Unemployment has risen to 5.8 per cent, from under 5 per cent in April 2011. But look at the big picture.

What startles me is that since February 1978, the total labour force participation rate has risen only 3 percentage points. Despite massive changes in economic structure, labour laws, flexibility and social pressure to wear neckties, work is almost as distasteful as ever.

Total participation has risen from 61.3 per cent, to just 64.6 per cent. That means male disengagement has matched female engagement engagement practically one-for-one.

That massive surge of female empowerment has been met with a deep sigh as men settle onto the couch.

Why has participation not surged over the long run? Perhaps it is because Australia is rich. We can afford to retire earlier, and even take a few mini-retirements mid-life, such as long stints backpacking, or extended periods of parental leave.

Source: ABS National Accounts, Sept 2013

Stagnant labour force participation is conventionally seen as bad news.

If you are a good Treasury alumnus, like me, your brain is seared with three Ps. Productivity, population and participation. These are the three factors that make sure enough productive activity occurs to keep us all in the lifestyle to which we are accustomed.

But let us be totally frank. While productivity gains are a free kick meaning we do more with less, the other two create trade-offs.

Increasing Australia’s population is a costly way to increase the labour force. We need to build a whole lot of extra infrastructure to accommodate extra people. 

And increasing participation also comes with trade-offs. Work is called work for a reason. Unless you are a professional sportsman or a clown, work is not really much like play. If people can avoid it, they often will. That’s what this graph makes abundantly clear.

If you leave your job aged 55 and still have the legs for ten years of golf, or if you take a year off to be with your young child, opting out of the workforce could be as much a contributor to national well-being as GDP is.

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Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

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