Deloitte Access Economics Employment Forecasts: job growth at a turning point

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Deloitte Access Economics Employment Forecasts: job growth at a turning point

23 November 2022: The rapid post-COVID recovery of the past year is nearing its end, with the slowing global and national economy likely to take some further steam out of the domestic labour market. The recent pace of improvement has slowed, with employment increasing by only 28,000 over the last four months, compared to an increase of 154,000 in the four months prior.

Strong labour demand to date has seen the country’s employment grow to over 13.6 million – with more than 300,000 additional Australians becoming employed this year alone.

Releasing Deloitte Access Economics’ latest quarterly Employment Forecasts report, Deloitte Access Economics partner and report lead author, David Rumbens, said: “Despite the global and domestic pressures, the labour market remains very tight. The unemployment rate currently sits at just 3.4%, equal to its low point for this cycle. And underscoring the strong performance of the labour market is the fact that the participation rate remains very strong at 66.5%.

“But a slowdown has emerged. It will likely be more pronounced for blue collar jobs, while there are still opportunities for white collar workers, and it may still be some time before the number of unfilled job vacancies returns to more normal levels.

“Those gains will in large part depend on Australia being able to return to typical, pre-COVID levels of net overseas migration.”

Deloitte Access Economics expects total national white collar employment growth will moderate after a record-breaking 357,800 in 2021-22, to a still strong 282,800 in 2022-23, before slowing to 143,100 in 2023-24. Looking ahead over the next decade, total national white collar employment is expected to grow on average by 1.8% per year between 2021-22 and 2031-32 – outpacing blue collar employment which is forecast to grow on average by just 0.8% per year.

Forecast growth in national employment

 

Source: Australian Bureau of Statistics, Deloitte Access Economics

“White collar employment within the public sector grew above the national average during 2020-21 and 2021-22 due to pandemic-related government stimulus, as well as recent disaster-related spending on floods and social assistance payments,” Rumbens said. “But we expect part of this growth will be unwound in 2022-23 – seeing white collar employment decline by 17,700 workers.”

“Deloitte Access Economics also expects CBD white collar employment will grow by 2.8% during 2022-23 – a touch slower than national white collar growth of 3.0%. Rapid interest rate rises may cause greater employment risk in those CBD areas more exposed to financial services employment which is forecast to decline during 2022-23. That means greater short-term risk for the Sydney and Melbourne markets.”

Deloitte Access Economics director and and report co-author, Blair Chapman, said: “Promisingly, open borders are starting to help alleviate labour pressures across the country, with migrants starting to come back in strong numbers.

“Australia’s population grew by 0.5% in the March quarter 2022 – the fastest quarterly growth since March 2018 – with the uptick underpinned by the largest quarterly increase in net overseas migration on record.

“An important issue that is holding Australia’s labour market back is the lack of job mobility. Part of the extreme skills shortage issue that businesses have faced is a mismatch between those wanting to work and the vacant jobs. A large part of the mismatch is driven by differences in the skills required by employers and the qualifications and experience of the unemployed.”

“International research has found that low labour mobility can result in a misallocation of labour across cities within a country and, in turn, result in lower aggregate productivity. In addition, moving jobs lets individuals understand their worth in the labour market and forces employers to ensure they are re-evaluating employees’ wages – part of the reason we have seen wage growth stagnant over the last decade.

Employment Forecasts is released quarterly and provides forecasts and commentary for each industry, plus white collar, blue collar and office demand index (where the latter draws on the ‘office intensity’ of each industry). There are three levels of data available: state, city and CBD. Employment Forecasts is particularly useful in the analysis of property market demand.

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