Data released by Indeed shows that while Australia’s economic recovery was temporarily derailed by lockdowns and restrictions, it’s not all bad news. With job listings at a record high and the labour market tightening by the day, there is still cause for economic optimism in 2022.
Delta derails job market
In early 2021 it looked as if Australia would make a world-leading comeback from the pandemic. By March, more Australians had jobs than before the pandemic. Employment increased by an impressive 300,000 people or 2.3% over the first half of 2021.
However, when the delta variant made it ashore and caused havoc across NSW and VIC, Australia’s economic recovery was derailed. Nationwide employment tumbled to a low of 2.5 per cent as businesses struggled to stay afloat.
Despite the setback, Australians should feel optimistic. The impact of the delta variant has not lingered long, and job postings on Indeed rebounded sharply as lockdowns eased.
Callam Pickering, the APAC economist at Indeed, said, “Australia’s labour market snapped back in November in spectacular fashion.
“While lockdown was dreadful and devastating for many, the labour market is now as tight as we’ve seen since the global financial crisis began.”
There is reason to feel optimistic about the nation’s economic potential in 2022. According to the Reserve Bank of Australia, with job postings and vacancies at a record high, it is expected that employment will continue to grow and push the unemployment rate into the low 4 per cent range.
Strong job listings
When lockdowns finally loosened in NSW and VIC, Australian job postings on Indeed were up more than 90 per cent from February 1 2020, the pre-pandemic baseline. To put it simply, there has never been this many jobs available in Australia.
Mr Pickering said, “This is a labour market report with no shortage of positives. Employment increased by 366,100 people, leaving overall employment at a new record high. The unemployment rate tumbled to 4.6%, returning to its pre-lockdown level, while the underutilisation rate fell to its lowest level since August 2012.”
In New South Wales and Victoria, the rebound in job postings reflects, in part, the rehiring of staff after lockdowns. Job postings in both states increased sharply from the beginning of October. Even with that in mind, the massive number of jobs available shows businesses are feeling confident about future prospects.
Growth in job listings across the rest of the country had a more gradual upswing, with less volatility due to a lack of economic restrictions, but strong all the same.
Labour Market tightens
The Australian economy is creating many jobs across the country post lockdown, indicating the high degree of fiscal stimulus is still carrying money around the economy. As a result of the flush of available jobs, Australia’s labour market is expected to tighten considerably in 2022.
Mr Pickering said, “Employment in Australia is currently 1.4% higher than it was before the pandemic began. The recent lockdowns saw nationwide employment fall by almost 360,000 people – concentrated among part-time, younger workers and women – which was offset in November by the 366,100 person gain.”
The nation’s lack of population growth, particularly among the under-35 crowd, is also expected to play a role. There is speculation that closed borders are contributing to recruitment difficulties for Australian businesses, having caused a population crisis.
The pandemic significantly slowed Australia’s population growth. In 2019, Australia’s population was growing at an annual rate of 1.5%; by early 2021, that had slowed to just 0.1 per cent. This, no doubt, has added to the tightening labour market.
The population aged 15-34 is almost 5 per cent lower than it would have otherwise been had the pandemic never occurred.
Mr Pickering continued: “Forward-looking measures, such as job vacancies and job advertisements, suggest that the labour market is only going to tighten further. Record creation of new jobs, combined with labour supply issues, should push the unemployment rate into the low 4 per cent range in the near term.
“Increased competition for talent should spill over into higher wages, as businesses try to attract new staff and retain existing workers.
“For the Reserve Bank of Australia, these figures are perhaps a little stronger than expected. They forecast that the unemployment rate would reach 4.75 per cent by year-end, compared with 4.6 per cent in November, so there is some upside risk to their forecasts and policy outlook.
“Market chatter is around a rate hike next year, compared with the more conservative estimate of the RBA, and increasingly you’d favour the market view.”
Looking to 2022
While Australia’s economic recovery may have been thrown off course by the delta lockdowns in the mid-year, the outlook for the Australian jobs market moving into 2022 is bright.
One of the main reasons Australia experienced such a stunning economic recovery in early 2021 was the combination of growing demand and low population growth. The same dynamic will continue in 2022, tightening labour market conditions and increasing wages.
Widely reported labour shortages may be the greatest challenge for Australian businesses next year. Finding sufficient talent to fill available roles will no doubt become more complex.
The fiscal response to the pandemic has driven up demand; while supply remains stagnant, this combination has proved challenging for recruitment. It is unlikely a radical shift from this dynamic will occur in 2022.
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