Victoria's employment rate for May was 5.9 per cent, the second-worst in the nation. But its under-employment rate, which measures the proportion of workers also forced to work fewer hours, was easily the nation's worst at 8.5 per cent, almost one complete percentage point above the national average.
Its combined so-called "underutilisation rate", reported by the Bureau of Statistics with the unemployment rate for the first time yesterday, amounts to an extraordinary 14.4 per cent, meaning that 1 in every 7 Victorians available for work are now unable to work as much as they want.
The Bureau's says the national underutilisation rate has soared from 10 per cent at the start of last year to more than 13 per cent today. In that time an extra 210,000 Australians have been forced to work reduced hours in addition to the 58,000 who have lost their jobs outright.
ICAP Securities economist Adam Carr says employers are doing everything they can to hold on to workers at reduced hours rather than sack them completely, in the hope that things turns up.
"Re-hiring is expensive and there is clearly a realisation that to shed staff hard now would leave firms ill-placed to deal with a pick-up," he says.
But JP Morgan's Helen Kevans says some employers thinking of sacking workers have little time left.
"Under the new laws from July the WorkChoices exemption from unfair dismissal laws for businesses employing less than 100 staff change. More small businesses again will again be subject to those laws."
Melbourne University economist Mark Wooden told a Melbourne Institute forum that many of workers who are on paper being switched form full-time to part-time work may find themselves working just as many hours as before.
"It isn't right to think that a downturn necessarily means fewer hours away from home," he said.
Melbourne consultant Ed Shann, a former senior Treasury official and economist for the Business Council said far more people would be affected by work drying up than the headline unemployment rate of 5.7 per cent suggests.
"It is tempting to think around 94 per cent of the workforce are unaffected," he told the forum.
"But given the huge flows into and out of employment each month many of those people are in for a period of unemployment over the next two years and many more will lose work and income without being technically unemployed.
"Some are moving from full-time work to part-time work involuntarily as their boss cuts their hours, some are going straight from employment on to the old age or disability pension, and others are moving from high-paid jobs in former boom sectors like mining and finance to lower-paid jobs elsewhere."
Dr Shann said that while the number of Australians officially unemployed was likely to hit 1.1 million, the number who found themselves unemployed for at least one month or were forced to work fewer hours over the next two years was likely to reach 3.3 million.
Australia's total workforce amounts to 11.4 million.
"I stress that the figure of 3.3 million is a guess," Dr Shann told the Forum.
"But it gives you an idea of how far the pain will spread."
"The self-employed in trades and in retail and tourism might actually find they are working longer hours because they have customers who are spending less. They might have to work harder just to try and bring in the same income."
Prime Minister Kevin Rudd yesterday asked the Australian Industry Group to brace for "more bad news to come," as unemployment continued to rise.
"No-one likes to see unemployment rise. But even after today’s data Australia’s unemployment rate is lower than each of the major advanced economies except Japan."
Industry Group chief executive Heather Ridout responded that while things were tough they seemed to be "getting worse more slowly".
