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Last week’s Labour Force release by the Australian Bureau of Statistics for October 2021 heralds the starting point for Australia’s transition from lockdowns to living with the virus.
After two straight months of decline, a further 46,000 jobs were lost in October (largely concentrated in Victoria) and the unemployment rate jumped to 5.2% (from 4.6%).
A strange result given the recent reopening. However, the survey only covered up to 9 October – prior to any substantial easing of restrictions in New South Wales and Victoria. Although the headline figures aren’t truly reflective of the benefits of the reopening just yet, they do show the promise of what is to come.
Nationally the participation rate increased for the first time since June, driven by an increase in job seekers, particularly in New South Wales as individuals began their search for work in anticipation of the lockdown ending.
Despite the recent lockdowns, there also remains unmet labour demand in many sectors. The Beveridge curve (which captures the average historical relationship between the unemployment rate and vacancy rate) suggests that the Australian labour market is in a period of heightened mismatch (Chart 1).
That is, the skills required by employers do not align with the skills of those searching for work. Since the beginning of the pandemic there has been a notable decline in temporary visa holders with working rights in Australia. Together these suggest that re-starting international migration will significantly improve the functioning of the Australian labour market.
Chart 1. The Australian Beveridge curve
Source: Australian Bureau of Statistics
Deloitte Access Economics’ latest Employment Forecasts outlines that while Delta outbreaks and associated lockdowns have paused Australia’s jobs recovery (particularly for the industries which cannot transition to a work from home environment) strong momentum is expected early in the new year.
Now that fully vaccinated workers are allowed back into the office in New South Wales and Victoria there has been a notable increase in office attendance across the major CBDs – this is the key to getting jobs back into the sectors hit hardest with employment returning to city cafes, bars and entertainment venues.
The jobs recovery in Sydney and Melbourne is expected to pick up in early 2022, as people adjust to the ‘new normal’. In other CBDs, where employment has already recovered to its pre-COVID levels, employment growth is expected to slow over the remainder of 2021-22 but pick-up again when borders open more fully (Chart 2).
Chart 2. Annual change in white collar employment – National CBD Total
Source: Deloitte Access Economics’ Employment Forecasts
Employment growth will initially be fastest in those industries that lost the most employment during lockdowns, like arts & recreation services. Beyond the industries recovering from large lockdown losses, health care and professional services are expected to grow quickly, boosting white collar employment in CBDs.
Deloitte Access Economics expects that 2022-23 will be the strongest year for white collar employment growth since 2006-07, with employment growth of 3.1% in that year.
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.