Want to know about unemployment in Australia, the Gareth Hutchens stories at the ABC are always worth a read. I’ve edited his story below for space. The full story is here.
Resume writers and employment specialists are a good barometer of what’s happening in the labour market and in the last three weeks, I’ve seen considerable tightening. You can almost hear the economy grinding to a halt.
The Reserve Bank’s aggressive interest rate hikes will push the unemployment rate up from 3.7 per cent to 4.5 per cent. People are hanging on to their money and/or spending savings.
Unemployment will go up which will make the job search more competitive and undermine wage pressures.
A couple of weeks ago, Treasury secretary Steven Kennedy gave an important speech. He said the unemployment rate had fallen “far faster” and to a lower level than policymakers thought possible in the pandemic era without generating significant wage pressures too.
The annual rate of wage growth has only recently returned to 2012 levels.
The sharp decline in the unemployment rate occurred for a number of reasons. When we closed our international border at the beginning of the pandemic in 2020, we cut off a major source of labour supply.
It saw thousands of people leaving Australia, which contributed to job vacancies jumping to record highs.
At the same time, we pumped an enormous amount of stimulus into the economy and the Reserve Bank cut interest rates to record lows.
That drove a rapid recovery when lockdowns ended and workers were in high demand.
With closed borders, employers had little choice but to get workers from the local pool of unemployed people. It pushed the participation rate, and the employment-to-population ratio, to record highs.
With workers becoming a scarce commodity, nearly all of the jobs created were full-time.
The tight labour markets also benefited people who typically find it hardest to get work, such as the long-term unemployed.
Things might not look so rosy in the near future as the economy stalls and begins to contract.