Weekly Economic Briefing: Jobs, jobs, jobs - Economics blog | Deloitte Australia has been saved
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Central to the sense that Australia has recovered well from COVID has been the rebound in jobs. Relative to February last year (that is, before COVID hit), there are 130,000 more people employed across Australia. Unemployment is also lower than it was before the crisis – and that’s true in level terms and as a share of the labour force.
More than that, full-time jobs are growing faster than part-time ones, and the number of hours worked is surging ahead. Combined, that’s helping to push down underemployment to levels not seen since 2014.
The jobs news is so good that we’re starting to see a shortage of workers across the economy – a trend that’s compounded by the closure of international borders.
More than a quarter of Australian businesses are struggling to find suitable workers, with large and medium businesses facing the greatest barriers. And nearly one-in-five businesses reported that, based on current operations, they didn’t have sufficient workers to operate as desired.
Some three-quarters of employers reported a lack of applicants as being a key factor. And a third of businesses reported the closure of international borders – and lack of migrant workers – was hindering their ability to find workers.
This is not the end of the story on the jobs surge, however. With job vacancies and job ads remaining elevated, the outlook remains strong for the coming months. The latest data from the ABS shows vacancies are 60% higher than pre-COVID levels. And 22% of businesses reported at least one job vacancy in May – double the number in February.
The result is that the number of unemployed people per vacancy is at a record low – and for every job opening, there are now only two unemployed people, down from a peak of nearly 7 in May 2020.
Chart 1: Number of unemployed people per job vacancy
So how can businesses adapt to the challenge of worker (and skill) shortages?
One way is to look at the existing stock of workers – and better utilise those wanting to work more hours. While underemployment is at lows not seen for quite some time, more than one million Australians are still looking to work more hours. These workers represent a large source of untapped potential – and with fewer onboarding and training costs, they can provide quicker and more effective alternatives to hiring new staff.
This is particularly true for industries with larger casualised workforces such as retail, hospitality and recreation.
Chart 2: Underemployment by industry
In fact, for these sectors lockdowns are adding to the skills shortage problems. When lockdowns hit, it’s these workers that are prone to losing shifts. And that’s incentivising many to look for more stable employment. So by the time lockdowns are over, many workers are gone.
The result, at least over the next year until we open the international borders, may be a shift away from casual work to more permanent roles – giving workers and businesses greater certainty. Even now, casual employment remains below pre-COVID levels, while permanent roles have surged ahead.
Of course, that trend relies on Australia’s jobs recovery remaining on track. Current lockdowns around the country cloud some of the outlook but, promisingly, our experience over the past year has shown strong resilience in the job market as restrictions are eased.
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.
Harry joined Deloitte Access Economics in January 2017 after completing a Bachelors of Arts and Commerce, with honours in Econometrics and Business Statistics from Monash University. Harry’s area of focus is data analytics and econometric modelling, having conducted a range of research surrounding mental health, prescription drug use, labour markets and ageing populations.