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Today’s labour force data released by the Australian Bureau of Statistics (ABS) for July 2021 has come as a surprise to many. Australia’s unemployment rate fell to 4.6% (a level not seen for almost 13 years) and 2,000 jobs were added to the economy.
But amongst the positive headline figures, cracks are starting to appear. The national participation rate and number of hours worked fell during the month and the underemployment rate jumped up to 8.3% –suggesting that many people aren’t currently working the hours they ideally like.
And when you lift the hood on the states and territories, the lockdown picture becomes more pronounced. During July, employment fell hard in New South Wales (by around 36,400 workers), while Queensland also saw a shift down (by around 6,600). By contrast, employment increased everywhere else – le by Victoria (by around 16,000) and South Australia (by around 10,700).
Chart: Percentage change in state and territory employment
Last year the country experienced a large drop in the number of hours worked relative to the drop in the number of people employed – thanks in part to JobKeeper which kept employees connected to their employer.
However, even now, a similar pattern is starting to emerge – hours worked declined 7.0% in New South Wales, while employment declined 0.9%. That suggests that a large cohort of people had reduced (or zero) work hours at the early stage of the Greater Sydney lockdown, but still maintained their jobs – perhaps unsurprising, given that almost one in 10 people are now underemployed in New South Wales.
With Melbourne back firmly in lockdown mode, case numbers continuing to rise across NSW, and an uncertain outlook in many other regions, these figures are a hint for what’s to come elsewhere.
While Australia’s labour market is holding up much better than expected, we are still yet to see a meaningful uptick in wages.
Yesterday’s ABS release of the Wage Price Index revealed that wages grew just 0.4% over the June quarter, with annual wages rising 1.7%. While this is a slight rise from last quarter, it is still a long way off buoyant – and particularly for the public sector, as wages grew just 1.3% in the 12 months to June 2021, the slowest annual rate on record.
Some sectors are showing signs of life on the wages front, with wages in professional services and construction having risen by more than 2.0% in the past year.
While it’s not yet pushing up broad based wages, evidence continues to mount of skill shortages. Currently more than 11,000 job are advertised for general-inquiry clerks, ICT professionals and sales assistants across Australia, and total job advertisements remain 38.3% above pre-COVID levels.
David is a macro economist with extensive experience in applied economic and quantitative analysis of the Australian economy, along with considerable experience in labor market analysis. David is a regular commentator on macroeconomic trends, and prepares a weekly economic briefing newsletter.
Hamish joined Deloitte Access Economics in 2020 after completing a Bachelor of Economics with Honours from the University of Tasmania. He works on a diverse range of projects as a member of the Macroeconomic Policy & Forecasting and Computable General Equilibrium (CGE) teams. Hamish has experience delivering economic analysis and commentary to a range of clients across the public and private sectors.