SYDNEY • Australia’s effective unemployment rate that also includes people who have opted against searching for work as the economy contracts is almost double the official jobless level, Treasurer Josh Frydenberg said.

“That is around 13.3% right now,” Frydenberg said of the effective rate, in contrast to the official unemployment rate of 7.1%. “That is a large number of people reflecting the economic challenges that we see right now.”

Australia’s economy tumbled into recession in the first half of the year — ending an almost three-decade expansion — and Treasury, the department that provides economic analysis and develops policy for Frydenberg, reckons official unemployment will climb to 8% this quarter.

“We have seen a big reduction in hours worked in the months since the Covid-19 pandemic first hit in Australia. Globally, they are seeing the same,” the treasurer said. “That just reflects the enormous economic challenge that we face and the impact it’s having on the unemployment rate.”

The official unemployment rate has been held down by people who gave up looking for employment — captured with sharp fall in the participation rate — and by the government’s JobKeeper programme that pays a wage subsidy to keep workers tied to employers.

The jobless rate probably edged up to 7.2% in June as those previously discouraged from job searching return, offsetting the 100,000 positions added in the month, economists predicted ahead of Thurs- day’s employment data. The expected surge in hiring reflects the removal of restrictions and reopening of the economy during the month.

The southern state of Victoria, the second-largest contributor to GDP, has since re-imposed lockdown orders as a second wave of Covid-19 sweeps the state capital, Melbourne.

Frydenberg is due to deliver a fiscal and economic statement on July 23 that will outline the government’s plans for ongoing stimulus as programmes like JobKeeper and JobSeeker, a temporarily higher welfare payment for the unemployed, that are due to expire in September. — Bloomberg