It is likely that the current tight labour market and low unemployment rate in Australia may provide some level of protection for workers from large-scale layoffs in 2023, as the local economy is expected to remain relatively strong, according to Kris Grant, CEO of management consultancy ASPL Group.
The Australian Bureau of Statistics released the latest unemployment data for the month of December, revealing a seasonally adjusted unemployment rate of 3.5 per cent. Although this was slightly higher than what analysts had predicted, the report also highlighted positive employment growth, with the number of people employed in the country increasing to 13,765,200.
These figures paint a mixed picture of Australia’s job market as the year draws to a close.
“Australians should be insulated from the large-scale layoffs we are now seeing in the tech sector in the US. We are still seeing plentiful jobs created in our biggest industries, such as education and healthcare, and there are not enough candidates to fill positions,” Kris Grant said.
“While the rest of the world falls into recession, or close to it, Australia is likely to escape recession this year, and mass layoffs, with the economy, also helped on by the mining sector. Miners can’t get enough workers into their mines to get iron ore, coal, copper, oil, lithium, gas and other key commodities out of the ground.
“China’s reopening and global decarbonisation will only add to demand for Australia’s commodities and help drive greater jobs growth in the mining sector. The travel sector too, is rebounding, with many more tourists visiting Australia this year, which will exacerbate a skill shortage in that sector.
“With the jobless rate hovering at around 3.5 per cent, the lowest for several decades, employers will have to pay higher wages to attract and retain staff this year. We are also likely to see even more Australians hold down two or more jobs this year after a record number of Australians took multiple jobs in 2022,” Grant said.
“Employers need to be smarter about workforce planning to overcome any skills shortages they face. Organisations may need to develop skills internally and invest in existing employees or look to migrant labour to improve the supply of skills they need now and in the future.”
The employment-to-population ratio stood at 64.3 per cent, indicating a strong level of employment among the working-age population. The underemployment rate remained unchanged at 6.0 per cent, and the number of monthly hours worked by Australians rose to 1.89 billion, indicating a steady level of economic activity.
Furthermore, the underutilisation rate, which combines the unemployment and underemployment rates, also increased by 0.3 percentage points to reach 9.6 per cent in seasonally adjusted terms. This rate measures the percentage of the working-age population that is either unemployed or underemployed. Despite the increase, the underutilisation rate is still 4.4 percentage points lower than it was in March 2020.
These figures indicate that the job market is still recovering from the impact of the pandemic, but the situation is not as dire as it was at the height of the pandemic.
Lauren Ford, head of labour statistics at the ABS stated that the strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market.
However, even though hours worked grew during 2022, there continued to be more people than usual working reduced hours due to illness.
“With employment decreasing by around 15,000 people, and the number of unemployed increasing by 6,000 people, the unemployment rate remained steady at 3.5 per cent.”
“The seasonally adjusted participation rate fell 0.2 percentage points to 66.6 per cent in December, back to around where it was in October. Despite this slight fall from its historic high, it finished the year 0.8 percentage points higher than its pre-pandemic level,” Ms Ford said.
Employment-to-population ratio decreased by 0.2 percentage points to 64.3 per cent in December. This ratio measures the percentage of the working-age population that is employed. Despite the decrease, the ratio remained elevated compared to pre-pandemic levels, being 1.9 percentage points higher.
In addition, the seasonally adjusted monthly hours worked also decreased by 0.5 per cent for the second consecutive month, following a peak in October. This decrease in hours worked follows a strong growth through 2022, with an annual employment growth rate of 3.4 per cent and hours worked increasing by 3.2 per cent.
“The falls in employment and hours worked in December followed strong growth through 2022, with an annual employment growth rate of 3.4 per cent and hours worked increasing by 3.2 per cent.
“The strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market,” Ms Ford said.