Jobseekers are enjoying the best labour market in almost 14 years, with the unemployment rate falling further as employers scramble to secure workers.
Australia’s labour market continues to romp back to recovery, with the unemployment rate falling to its lowest level since just before the start of the global financial crisis.
Australian Bureau of Statistics figures released on Thursday showed the jobless rate fell by 0.5 percentage points to 4.2 per cent last month.
Increased competition for talent should spill over into higher wages, as businesses try to attract new staff and retain existing workers, experts said.
“This is the lowest unemployment rate since August 2008, just before the start of the global financial crisis and Lehman Brothers collapse,” ABS head of labour statistics Bjorn Jarvis said.
“The continued recovery in employment was also seen in strong increases in hours worked.”
Last month, 65,000 people gained work, following on from a record-breaking 366,000 increase in November, when a large number of people who were attached to a job re-entered the labour force.
Mr Jarvis noted the numbers reflected the labour market in the first two weeks of December – before the big spike in Covid-19 cases later in the month.
Recovery in NSW and Victoria’s labour market continued to have a big influence on the national figures, he said, with employment in these two states around where it had been in May, having fallen by 250,000 and 145,000 jobs during lockdowns
The ABS said changes in employment and participation rates had been particularly large for those aged 15 to 24 during the pandemic.
“The youth unemployment rate fell by 1.5 percentage points to 9.4 per cent, the lowest since November 2008, and the youth participation rate increased by 0.4 percentage points to 70.5 per cent, the highest it had been since September 2008,” Mr Jarvis said.
Prime Minister Scott Morrison said the figures, particularly for youth employment, were pleasing but there were still challenging times ahead.
“There is much more work to do to ensure that we can keep our economy strong to this pandemic,” Mr Morrison told reporters, adding Australia would likely pass six million booster shots having been administered on Thursday.
Callam Pickering, APAC economist at job site Indeed, said the tight labour market had created a headache for recruiters but could be hugely beneficial to jobseekers.
“Employment in Australia is currently 1.9 per cent higher than it was before the pandemic began,” Mr Pickering said.
“Forward-looking measures, such as job vacancies and job advertisements, suggest that the labour market is only going to tighten further.
“Record creation of new jobs, combined with labour supply issues, should push the unemployment rate into the low 4 per cent or even high 3 per cent range in the near-term.
“Increased competition for talent should spill over into higher wages, as businesses try to attract new staff and retain existing workers.”
CommSec senior economist Ryan Felsman agreed wages growth could strengthen, with competition for Aussie workers increasing and workers feeling more secure in their job.
Mr Felsman also concurred with RBC Capital Markets chief economist Su-Lin Ong, who said the march towards the ideal of full employment – effectively meaning everyone who wants a job has one – would likely have an impact on the Reserve Bank of Australia’s key forecasts driving interest rate hikes.
“An upward revision (to the wage price index forecast) would be consistent with the tighter labour market,” Ms Ong said.
Mr Felsman said CBA believed the conditions deemed necessary for a lift in the rate would be reached by the end of 2022, not the end of 2023 as expected by the RBA.
AMP senior economist Diana Mousina said her company now expected the RBA to start hiking rates in August, three months ahead of its prior forecast.
Originally published as Scramble for workers drives unemployment to lowest rate in 14 years
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