Our interview for ABC Buisness News aired on 17th March 2022. Full video can be seen here
Australia’s jobs market has continued to strengthen, with unemployment falling to an equal record low of 4 per cent.
- The unemployment rate is the equal lowest level it has been since the ABS monthly labour force survey started in 1978
- Participation is at a record high, with 66.4 per cent of Australians aged over 15 either in work or looking for it
- Hours worked rebounded in February, but absences due to illness were still almost double usual levels due to Omicron
“We would need to go back to the mid-1970s to find a similar level of unemployment,” noted KPMG’s chief economist Brendan Rynne.
Between World War II and the 1970s unemployment in Australia was more typically around 2 per cent, but those figures pre-date the current ABS labour force survey.
The monthly Bureau of Statistics figures estimated that 77,400 extra people were employed in February, taking unemployment down from 4.2 to 4 per cent.
Hours worked rebounded 8.9 per cent, recovering from the COVID-19 Omicron wave of absences that saw working hours plummet in January.
But the ABS head of labour statistics, Bjorn Jarvis, said the effects of Omicron were still evident.
“Participation rose to a new record high in February and was around 0.6 percentage points higher than the start of the pandemic,” Mr Jarvis observed.
“The increase in participation continues to be particularly pronounced for women, rising 0.2 percentage points to a further record high of 62.4 per cent in February, and now 1.2 percentage points above the start of the pandemic.”
Mr Rynne said that makes the unemployment number even more extraordinary.
“This super-low unemployment rate has occurred when participation in the labour force is at all-time highs – meaning the unemployment rate hasn’t just dropped due to workers withdrawing from the labour market,” he noted.
Employers struggling to find skilled staff
Chris Kenny’s sheet metal pool manufacturing business is busy, and he is struggling to find enough skilled workers to keep up with the jobs coming in.
His business, based in the outer-Melbourne suburb of Dandenong, started a new worker this week, but Mr Kenny has four more roles he is still trying to fill.
“We really need people who are skilled in working with sheet metal and all facets of fabrication,” he told The Business.
“This is a dying industry, in terms of fabrication, and manufacturing in Australia in general has been quite hard hit.
Nathan Meier joined the company on Monday as a fabricator.
He was employed in a different role at another business, but wanted a job that gave him a better work-life balance and also the chance to develop his skills.
“My previous job never ended. Six, seven, eight o’clock at night I’d be on the phone, and Saturdays and Sundays,” he lamented.
“I just wanted to come in, be part of a team, do some work and not have to worry about answering the phone.”
‘Pressure on wages’
In busy periods, Mr Kenny has been using labour hire firms, or workers on short term contracts, to supplement his core staff.
He said those rates have skyrocketed.
“For example, labour hire, which we use a little bit of in the business, we’ve seen that double in terms of the rates in the last six months and also obviously there’s increasing pressure on wages across the board.”
Labour shortages and wage pressures are being felt across industries and around the country.
Recruiter Graham Wynn said regional areas, like Shepparton in Victoria where he is based, are struggling to fill extra services jobs to meet their growing populations.
“Shepparton is certainly struggling at the moment for those retail, hospitality, agricultural, any sort of blue collar workers as well,” he told The Business.
Mr Wynn said the strong demand for roles was showing up in the pay being offered to new recruits across industries.
He recently hired for a welding company, which offered more money to secure a worker.
“Normally that pay around $30 to $33 an hour for a person for that kind of job, at the top end of the scale, they’ve had to now go to $36 or $38 per hour, just to get somebody in, who wouldn’t be as skilled,” he observed.
“We had a help desk support person for an IT company in the past paid around $60,000 to $65,000 a year to do that, we filled one [job] recently for about $75,000, so an extra $10,000 to $15,000.”
Mr Wynn said businesses are also poaching workers from each other as they struggle to get skilled workers.
“Those who are any good, who’ve got skills, they’re working, they’re not unemployed,” he said.
Mr Wynn does not see the jobs market normalising until well into next year, after migration returns to pre-COVID levels.
“I think this could take at least 18 months to start correcting itself, to get that influx back into the country, of the people who do these jobs.”
CEDA senior economist Gabriela D’Souza agrees.
“We do have an estimate that the [federal] government hopes to resume its NOM [net overseas migration] figures back to 235,000 by 2023-2024,” she told The Business.
“I do suspect that, by the time that happens, the labour market will start to stabilise and employers might not be as cranky about not having as many workers around in the workforce.
“We do estimate that will add to some of the slack in the labour market.”