Unemployment rate falling to 48-year low triggers skills warning

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said the low unemployment rate matched a 48-year-old skills shortage, which would dampen the economy.

The number of unemployed is now 537,000, down from 700,000 just before the COVID-19 crisis, and the latest vacancies data from the Australian Bureau of Statistics suggests companies are trying to fill more than 400,000 vacancies.

Call for an “ambitious plan” to solve shortages

The NAB’s first quarter business survey showed a near-record 84% of businesses reporting difficulty finding suitable labor. Last week, the bank said growth in labor costs in April hit its highest level since records began in 1997.

More investment in skills development and a temporary two-year increase to 200,000 in the number of skilled migrants was needed to remedy the situation, Mr McKellar said, calling for an “ambitious plan to address” the shortages.

Ms Westacott said targeted migration to fill critical shortages at all levels was needed “right now”. A skills system that made it easy and quick for workers to train for employers’ needs was urgently needed.

“You can’t employ hundreds of Australians on a construction site if you don’t have a surveyor, and you can’t transform our economy to decarbonize, digitize and diversify without access to the best talent in the world,” said she declared.

CommSec chief economist Craig James said further employment gains could be weak as some states were likely already at full employment.

“The assumption is that ‘full employment’ is consistent with an unemployment rate close to 3.5% to 4%,” he said, which was already the case in New South Wales, in Tasmania and Western Australia, the latter at 2.9%.

Mr James said more and more businesses were frustrated by the lack of skilled workers and that the party which formed government after Saturday’s election should address the issue thoroughly.

Vacancies were becoming harder to fill, JPMorgan economist Jack Stinson said, and the global investment bank expected the jobless rate to show signs of stabilizing in the coming quarters.

“We also see that further equity gains will be increasingly hotly contested as cyclical equity tumbles and trend growth slows, weighing on potential growth prospects … at the margin,” Stinson said.

Economists are mixed about the drop in the unemployment rate. ANZ expects it to fall to “low 3” later this year, and the Reserve Bank of Australia thinks it will fall to 3.6% by the end of 2023 and then level off.

Unemployment fell by 11,000 in April, and with just 4,000 people finding work, that means around 7,000 have left the labor force, prompting Australia Institute senior economist Matt Grudnoff, to demand greater security of participation, hours worked, job security and real wage growth.

Participation rate drops

The participation rate fell during the month, but remained high near the record highs reached in February and March; the underemployment rate fell to 6.1 percent and the underutilization rate to 10 percent.

“These were their lowest levels since 2008,” said Westpac senior economist Justin Smirk.

Seasonally adjusted hours worked rose 1.3% in April, largely reflecting a rebound from March falls in flood-affected areas.

The strong Labor Force result came a day after ABS wage data showed growth of just 2.4% in the year to March 31. With CPI inflation of 5.1% over the same period, real wages fell by 2.7%.

But economists believe wages are already starting to firm up.

“The tight labor market evident in the fall of unemployment to its lowest since 1974 and labor slack to its lowest since 2008 points to an acceleration in wage growth ahead,” he said. said Shane Oliver of AMP Capital.

Weak pay and employment results this week lead economists to expect the RBA to hike the cash rate by 0.25 percentage points in June. This follows a similar increase in May which took the record rate to 0.35%, the first increase since November 2010.

“Added to yesterday’s disappointing payroll data, this suggests that a 25 basis point hike in cash rates at the June RBA meeting is more likely than an oversized 40-50 basis point hike. base,” Ms. Birch said.

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