Australia's strong labour market continues to defy expectations
On Thursday, 23 June, the Australian Bureau of Statistics (ABS) released labour force figures for the month of May confirming that Australia’s labour market remains strong. This is good news for jobseekers but remains challenging for employees still struggling to fill open positions – particularly in high demand professions such as education and health.
The seasonally adjusted estimates for May show that the unemployment rate remains unchanged from the previous month: sitting at 3.9%. The full breakdown of today’s ABS seasonally-adjusted Labour Force figures is set out below:
- Unemployment rate remains at 3.9%
- Participation rate increased to 66.7%
- Employment increases to 13,510,900
- The employment to population ratio increased to 64.1%
- Underemployment rate decreases to 5.7%
- Monthly hours worked increased by 17 million hours.
The data shows that hours worked increased by 0.9% between April and May and employment increased by 0.5%. Australia’s strong labour market and continuing low unemployment is also being mirrored in other countries, such as Canada, who are recording similar figures.
Read more: Canada reports record-low unemployment in May
Employment data for New South Wales
To coincide with the release of this data, Business NSW in their media release of 23 June noted that workforce shortages are now impacting 9 out of 10 businesses across that state. This is based on data from the 2022 Workforce Skills Survey conducted by Business NSW.
This annual survey looked at 600 businesses across New South Wales. Of all the businesses surveyed, it found that almost every business in NSW had unfilled vacancies.
Last week, Australia’s Employment and Workplace Relations Minister, Tony Burke said that the employment figures for April alone should create an upward pressure on wages.
Read more: Labour Minister calls for 'stronger wage growth and job security' amid new survey
Last week’s 5.2% minimum wage rise awarded by the Fair Work Commission which was welcomed by jobseekers and even the union movement – had many concerned that it this pay rise would continue to add inflationary pressures to an already overheating economy. Although the trade union movement and other commentators, argued that this wage rise was necessary to address the rising cost of living across the country.
Under normal circumstances, you could be tempted to think that such strong jobs growth signalled a thriving economy. However, today’s ABS figures coincide with rising interest rates, cost of living pressures, climbing inflation, housing stress.
Rising labour costs have been added to this list - particularly after last week’s Fair Work Commission’s minimum wage decision. The shortage of candidates in many professions is also forcing companies to offer higher salaries – which may drive up labour costs even further.
The Reserve Bank has also predicted that Australia’s unemployment rate could fall even further to 3.7% by the end of this year. The strong jobs market is showing no signs of abating and Australia’s most populous state, New South Wales, is also feeling the effects of this tight labour market.
Workforce shortages affecting virtually every business across NSW
In their Workforce Skills Survey released on 23 June 2022, Business NSW found that 93% of businesses were struggling to find the workers they needed to fill vital positions.
Business NSW’s Chief Executive Daniel Hunter, commented that: “The business community in NSW is facing its most significant workforce challenge in more than 50 years.”
In addition, 72% or more reported failing to fill vacancies (three times or more) over 12 months and 26% of businesses reporting that staff shortages were because they weren’t getting any applicants for job vacancies. These findings were supported by information that Business NSW had been receiving from employers through their regional networks.
Australia’s current housing crisis was also cited as a potential reason for the ongoing workplace shortages. More than 36 percent of those surveyed reported that the lack of affordable housing in city and regional areas made it difficult for employers to attract workers to an area.
They suggested three ways to address the workplace shortages including:
- Training the local population.
- Increasing workforce participation
- Bringing back overseas workers and skilled migrants.
Business NSW’s full report also contained a number of recommendations and priorities for action such as:
- “Sustained, long-term real increases to Vocational Education and Training (VET) funding in the new National Agreement for Skills to bring down the costs of training, help training providers address their own workforce shortages and better link training to employment.
- An indefinite extension to the hugely successful Boosting Apprentice Commencements (BAC) initiative.
- Introducing initiatives to support people into work.
- Increasing skilled migrant numbers, cutting visa processing times, and encouraging the return of more working holidaymakers and international students.”
The information collected from both the ABS monthly labour force figures and Business NSW’s Workforce Skills Survey show that these skills shortages are affecting all levels of the Australian workforce – from entry-level positions all the way up to senior management.
