Weekend Edition: The Lowdown on High Employment
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Why did Australia’s employment numbers rise while the unemployment rate stayed at 4%?
A surprise lift in the number of people employed in the labour market statistics from the ABS this week, even though the unemployment rate is back at the four percent mark, which is where it was a year ago. So why? More people are working, but who are they and how persistent is this growth in employment gonna be? And are there enough jobs to meet the demand from those who want to work? And what's with the four percent? Are we stuck there now? That's this week. The morning call from NAB with Phil Dobby. The weekend edition. Well, the labor market data from the ABS this week provided one big surprise. The unemployment rate is at 4%. That's after a surprise downward tick in November number, so there's no surprise there.
But now the number of people working has increased quite considerably. Uh you'd think that would push the unemployment rate down further. But with a higher participation rate, more workers, the unemployment rate doesn't really seem to move. So let's dig down on those numbers further and find out what's happening. And also looking at the trends generally that we've seen post pandemic with Bjorn Jarvis, he's branch head for labor statistics at the ABS. So uh Bjorn, in the last year, almost four hundred thousand more people working, but over that time, the unemployment rate So so I would say it's
Unusual, but it's not unprecedented and and not rare. So interestingly, we did see around twenty seventeen, twenty eighteen, a bit of twenty nineteen, an even longer period of time where there was reasonably strong employment growth. But the unemployment rate basically went sideways. It was like in in trend terms, really oscillating around no no more than a bend that was about naught point one, naught point two percentage points wide. So in that respect, what we're seeing at the moment is kind of like what we were seeing back at that point. And that's it's it's been within this band of around 3.9 to 4.1 for the best part of a year. Um and and that has been at a time when there's sustained employment growth, but also reasonably strong population growth.
So that tells us that as the population's growing, For the unemployment rate to remain where it is, the kind of ratio of people that are going into the labor market, going into employment, but also going into unemployment kind of broadly consistent. But uh broadly consistent at a time when participation is also.
Trevor Burrus, Jr.: So are we at full employment? I know this is you know this is an area you probably don't want to get to because it uh get into because it sort of takes us into RBA policy, and I understand you want to sti steer a clear berth from that. Uh but I mean the RBA you'd imagine would be saying, well, there's a risk with all of this that it's uh that it's inflationary. Now uh I won't ask you that question, but I will ask you whether we can look at you know times in the past where we've seen And unemployment remaining relatively static and we've still seen inflation coming down. I mean perhaps not as low as four percent. That is a bit unusual, isn't it? Yeah. So um you you're right.
So calculating the the um the Nairu's kind of outside the um outside of our remit at the ABS is definitely something that's of particular interest to the Reserve Bank, uh Treasury, a range of uh Labor economists across government and and across the markets as well. Um but we do, when we're looking at the statistics, look at the relative level of the unemployment rate, employment to population ratio.
What historical employment trends explain the current high participation rate?
those participation rates and and a regular part of reporting information about the labor market is is saying, well what are you seeing now and and how unusual is this? So if I wouldn't say uh you know answering your question about are we at full employment, but to say what we're seeing at the moment. How unusual is the level that we're seeing across a range of these measures? The short answer is it's still relatively unusual. So the unemployment rate was around this level just before the start of the global financial crisis. So for it to be about 4 percent over the recent decades is pretty unusual.
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Chapters
8 chapters
1
Why did Australia’s employment numbers rise while the unemployment rate stayed at 4%?
0:01–3:26
2
What historical employment trends explain the current high participation rate?
3:26–7:37
3
Is the current low unemployment level inflationary or a sign of full employment?
7:37–12:06
4
How do under‑employment rates and job‑vacancy data reflect labor‑market tightness?
12:06–15:43
5
Which industries are experiencing the strongest job demand and vacancy growth?
15:43–19:06
6
Will population growth and migration keep pushing employment higher in the near future?
19:06–23:55
7
How does Australia’s labor market compare to the US and Canada post‑pandemic?
23:55–27:35
8
What can listeners expect in the next Weekend Edition episode on technology?
27:35–30:20