Australia’s unemployment rate dipped to 5.6%, in March 2021, continuing the employment recovery, as the economic bounce-back from the pandemic continues. Down from 5.8% the prior month, the unemployment rate is now just 0.4% higher than it was in March 2020, before the onset of the pandemic.
That is the good – very good – headline news, but it is reasonable to say that the nation is holding its breath a little to see what happens to the unemployment figures now that the JobKeeper program has ended. Remarkably however, there are 75,000 more people in jobs now than before the lockdowns precipitated by the pandemic commenced!
In fact, at 13.077 million people in work of some sort, the number of people with a job has never been higher. Unbelievable.
We can see the number of unemployed people and the unemployment rate in the chart below.
Looking at the flipside – the positive case we might say – the employment data is set out below. The chart shows the number of people in jobs, both part time and full time, and it also shows the participation rate.
It is true, inevitably almost, that the number of people in part time employment is growing quite strongly, but it remains in check at around 30% of total employment, and within bounds of the average of the last few years. Some of those jobs will become full time, over time, and that will help chop into the underemployment rate. More on that later in this analysis.
Really significantly, the Participation Rate is at an all-time high. At 66.3%, just shy of two-thirds of us are in work of one kind or another. It is little wonder that the JobKeeper program has been brought to an end, but it may well be that the Participation Rate will dip in April and for a few months, with plenty of people reportedly sustained in their job only by Government support.
One of the most crippling economic impacts is the combination of Unemployment (people without a job) and Underemployment (people with a job who need more hours). The Labour Underutilisation Rate (LUR) is a potential killer for an economy because it puts its key asset – people – on ice. At its worst in the pandemic, the LUR was above 20%!
The good news is that the LUR continues to fall and in February was down to 13.5%. Look for it to dip below 12% before jobs are back on track, in pre-pandemic terms. All things being equal, that does not look far off.
One reason that we can have some confidence about the underemployment rate falling is the number of hours we are all working each month. As we see below, in March, the average hours worked per capita pushed up to 86.12, above the historic average of 85.65 hours and above pre-pandemic levels. If you feel like you are putting in some long ones right now – you are!
Because economics is a dismal science, we will end on this note: We are working more hours, in particular occupations. Some of them are highly skilled and not easily replaced. Employers are battling to get the staff they need in a lot of cases – there is a labour shortage emerging, and only with a return to significant skilled migration, will it be diminished.
If there is a silver lining for the economy, it could be that the labour shortages will put overdue upwards pressure on wages, in some key sectors. That will aid consumption and expenditure fuels for the more organic growth we could all use, to replace the stimulus fuelled growth we are enjoying right now.
