New Jobs Data: Historic Unemployment Rate Reached Pre-Election

New jobs data is here! Yesterday, the 19 May 2022, the Government announced that Australia’s unemployment rate for April had dropped to its lowest level since 1974. This key jobless measure had dropped to a record 3.9 percent.

For the first time in 48 years, with an additional 4,000 jobs added in April, unemployment tipped below the 4 percent mark.

Employment advertising has remained at a record high. This, coupled with a higher-than-average proportion of businesses looking for new talent, and the increase of only 4,000 jobs in April reflects the desperate nature of the market: there are way more jobs than people able to fill them.

Underemployment was also down. This is the measure of people who have work but want to work more. The Australian Bureau of Statistics (ABS) data, which is seasonally adjusted, saw the underemployment rate drop from 6.3 percent to 6.1 percent. This is the lowest underemployment rate since before the GFC hit Australia, in 2008.

Full-time employment increased by 92,400 jobs. Conversely, part-time jobs declined by 88,4000 in April.

Despite rising to 8.8 percent, seasonally adjusted, the youth unemployment rate (for people aged 15-24) is still sitting around levels last seen just before the global financial crisis.

Jobs Data Australia

Covid Impact on Jobs Data

COVID numbers continue to climb in Australia. And this trend is impacting the capacity for the jobs market to operate at full functionality.

In the announcement of the jobs data, the ABS also stated that 740,000 people worked reduced hours in April, due to illness. And of these, 340,000 worked no hours – a figure triple that which is ordinarily recorded.

“Firms are partially compensating for the lack of employees by increasing hours worked [of healthy workers]”.

KPMG Senior Economist, Sarah Hunter

Jobs Data Highlights Workforce Shortages

The downside of this record-breaking unemployment rate is the severe talent shortages experienced by so many industries and companies across Australia.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the flip side to the sharp drop in unemployment were “the most severe workforce shortages in 48 years”.

COVID absenteeism is making it incredibly difficult for employers to operate at full capacity. And with the federal election happening tomorrow, the expectation is for the next federal government to address what are now considered chronic skills shortages.

Examples of how workforce shortages can be addressed include:

  • A long-term commitment to vocational education and training
  • Increasing the number of permanent migrants, who are skilled
  • Making the jobs market more attractive for pensioners and parents to stay in work, and to work more hours
  • Upskilling of existing workers in key industries (like healthcare, aged care)

Jobs Data Doesn’t Mean Better Pay

Throughout the pandemic, the federal government has undertaken extraordinary economic stimulus measures in an attempt to reach full employment.

But unfortunately, most workers haven’t realised the expected benefits of this tight labour market.

With the ongoing COVID crisis and the Russian invasion of the Ukraine, inflation is at its highest level in 20 years. This has sent the real value of the workforce pay backwards – at a staggering rate.

Having said that, with the continued demand for more workers, and the continued limited supply of domestic workers and skilled migrant workers entering Australia, it’s likely that wages growth will soon shift, positively impacting wage growth for workers.

Jobs Data

The Election and Jobs

As usual, there’s an ongoing stoush between Labor and the LNP, AND employers and unions, regarding whether this year’s minimum wage should increase to the rate of inflation.

The Australian Industry Group believes the ongoing labour market gains “…highlight the benefits of the current period of wage moderation”. Labor on the other hand, have made a commitment to get wages “moving again”.

“The costings we released today, our economic plan, our budget strategy, is all about responsible quality investments in a stronger economy, and a better future,” Dr Chalmers said “The economy is crying out for these responsible investments, to grow the economy the right way and get productivity moving again, and to get real wages growing again.”

Opposition Treasury Spokesman, Jim Chalmers

With the election tomorrow, it will be interesting to see what the political pundits foresee in the next three years, for jobs data and wages in Australia. Check back in here on Monday, for our round-up of the views and analyses of market experts, post the federal election.

 

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