Australia’s unemployment rate has fallen to its lowest level in almost 50 years, piling greater pressure on businesses struggling to find workers.
The unemployment rate dropped to 3.5 per cent in June, lower than the 3.8 per cent predicted by economists. In 1974, the jobless rate fell to 2.7 per cent.
Data released on Thursday revealed that 88,000 more people were employed in June from the previous month and that the workforce participation rate hit an all-time high of 66.8 per cent.
The number of unemployed people in the country is now almost identical to the number of jobs vacant at about 500,000, according to the Australian Bureau of Statistics. That compares with a ratio of about 3 to 1 before the pandemic.
Australia is in the grip of a labour shortage that has often pitted businesses and the public service against each other in the struggle to find enough workers.
“The fall in unemployment is very good news, but the gap between the number of unemployed people and job vacancies has narrowed to just 14,000, emphasising the severity of the jobs [staffing] crisis,” said Andrew McKellar, chief executive of the Australian Chamber of Commerce.
The shortage has cut across both skilled and non-skilled workers and has had a knock-on effect on supply chains, tourism and mining as well as airports, where chaotic scenes have become commonplace because of staff shortages.
The Labor government, which was elected in May, has called a jobs summit for September ahead of an October budget.
Prime Minister Anthony Albanese, who is Fiji attending a Pacific leaders’ forum, has held bilateral talks with island nations covering visa and migration policies for workers.
Jennifer Westacott, chief executive of Australia’s Business Council, said that Canberra needed to increase migration and widen the pool for long-term working visas to address chronic staff shortages.
“A lack of workers puts a handbrake on new projects and stifles investment. You can’t employ hundreds of Australians on a construction job if you don’t have a surveyor and you can’t tender for a new project without engineers or labourers,” she said.
Robert Carnell, regional head of research at ING, said the labour figures would increase pressure on the Reserve Bank of Australia to continue raising interest rates at a rapid rate.
“A drop in the unemployment rate was expected this month, but not of the magnitude recorded,” he said. “A drop to 3.5 per cent really does look quite alarmingly tight.”
New Zealand has raised interest rates consistently since October, including a further 50 basis point rise this week to 2.5 per cent. Australia has been more cautious, but has raised its rate to 1.35 per cent since May. The low unemployment rate, combined with soaring inflation, has made a further rise more likely, economists said.
Source: Economy - ft.com
