Geoff Gilfillan, Statistics and Mapping
Key issue
The labour market has recovered strongly following the re-opening of the economy after COVID-19 related shutdowns, with the unemployment rate sitting at just below 4.0% in March 2022, after reaching 7.4% in both June and July of 2020.
Young workers and female employees were more adversely affected by initial lockdowns but employment for these groups has rebounded strongly since the re-opening of businesses and borders.
Casual workers were affected more than permanent employees in terms of jobs and hours of work lost during the pandemic due to a higher proportion of them not being eligible for the JobKeeper Payment.
People working in service industries such as tourism and hospitality were affected far more than workers in other industries.
The Australian labour
market has experienced significant disruption as a result of the COVID‑19
pandemic. Lockdowns and restrictions on trading activities had a greater impact
on some industries than others, and on some types of workers than others.
Despite these disruptions the recovery in economic activity experienced since the
removal of restrictions has contributed to the fall in national unemployment to
a rate not seen since February 2008, just before the global financial crisis (GFC),
and in the mid-1970s.
Sharp falls in numbers and
rates of unemployment and underemployment are indications that the labour market is tightening rapidly. In other words, the supply of labour from unemployed
people and workers who would prefer more hours may be insufficient to meet the
labour needs of employers. Other indicators of tightness include very high levels
of job vacancies in a range of occupations and industries. There are also reports of emerging and persistent skill shortages across the economy and labour shortages in industries such as hospitality. Restrictions on migration as a source of additional labour
supply resulting from the Australian Government’s decision to close Australian
borders between March 2020 and December 2021 has exacerbated tightening in the
labour market. The borders re-opened for vaccinated visa holders
(including skilled workers) on 15 December 2021.
An imbalance of labour
supply and demand may contribute to increasing wage pressures in the economy in
an environment where inflation is also increasing at a much higher rate due
to several compounding factors.
Unemployment and
underemployment
Unemployment
Figure 1 provides a
long-term perspective for changes in the unemployment rate in Australia. The
chart highlights cyclical movements of the unemployment rate including the lows
reached during economic booms and the highs reached during economic recessions
in the early 1980s and early 1990s.
Figure 1 Unemployment rate, 1978 to
2022 (seasonally adjusted)
Source:
Australian Bureau of Statistics (ABS), Labour Force, Australia, (Canberra:
ABS, May 2022).
The unemployment rate for
people aged 15 years and over in Australia increased significantly from 5.3% in
March 2020 (just before the pandemic), to 7.4% in both June and July of 2020,
in response to lockdowns imposed by various state and territory governments to
prevent the spread of COVID-19. The unemployment rate has fallen significantly
since then, to 3.9% in both March and April 2022 (in seasonally adjusted terms).
The youth (15 to 24 years)
unemployment rate increased from 11.6% in March 2020 to 16.4% in July 2020
before falling to 8.3% in March 2022. This is the lowest unemployment rate
recorded for young people since it fell to 7.6% in August 2008.
After the experience of
the early 1990s Governments have been much more willing to increase spending
and introduce emergency payments quickly to stimulate economic activity and
prevent large increases in unemployment when there are signs of significant
economic downturns. For example, the Australian Government developed a $10.4 billion fiscal package to combat the impacts of the GFC, which was
equivalent to around 1% of gross domestic product (GDP).
Australia was one of a
number of OECD (Organisation for Economic Co-operation and Development) countries that introduced job retention schemes to contain the employment and social fallout
associated with the pandemic. The $130 billion JobKeeper package developed to
assist Australian workers, along with other measures, brought the total economic support package to $320 billion, which was equivalent to 16.4% of
GDP.
In a review of the impact of the JobKeeper Payment the Reserve Bank of Australia found (p. 28):
… JobKeeper played an important role in cushioning
the decline in employment over the first half of 2020. Our baseline estimate is
that one in five JobKeeper recipients would not have stayed employed during
this period had it not been for JobKeeper. At the aggregate level, this implies
JobKeeper prevented at least 700,000 additional employment relationships being
lost in the short term. Overall employment losses would have been twice as
large over the first half of 2020 without JobKeeper.
Trading restrictions
imposed at various times by state and territory governments had a significant
negative impact on total hours worked. People receiving the JobKeeper Payment
should have reported themselves as employed but working zero hours for economic
reasons if they were included in the monthly Australian Bureau of Statistics (ABS) Labour force survey. Those who were not eligible
for the JobKeeper Payment (and were let go by their employer for economic
reasons such as lack of work) should have reported themselves as either unemployed
or not in the labour force.
There were similar
increases in unemployment levels for men and women between March and July 2020
and similar falls in unemployment since (see Figure 2).
Figure 2 Change in the number of unemployed
males and females (seasonally adjusted), March 2020 to March 2022
Source:
ABS, Labour Force, Australia, (Canberra: ABS, May 2022).
Australia’s unemployment
rate of 4.0% in the March quarter of 2022 was the 15th lowest unemployment rate among 33 OECD countries based on survey data supplied by member countries.
This compares with a ranking of 21st lowest in the pre-pandemic March quarter
of 2020 when Australia’s unemployment rate was sitting at 5.2%.
Several OECD countries had
a lower unemployment rate than Australia in March 2022, including New Zealand (at
3.2%), Germany (3.1%), the UK (3.7%) and the US (3.8%).
Long-term unemployment
There were 144,700 people
who were long-term unemployed (unemployed for 12 months or more) in March 2022.
This group accounted for just under one quarter of the 580,300 people who were
unemployed at this time. This compares with 185,200 long-term unemployed people
in March 2020, just before the pandemic.
The ABS measure of the long-term unemployment ratio is the number of people who have been unemployed for
12 months or more as a share of total unemployment. The ratio reached a high of
36.0% in seasonally adjusted terms in May 1993, several years after the
economic recession of the early 1990s. It took until the middle of 1996 for the
ratio to fall to below 25%. It then fell progressively to 12.2% in April 2009 after
a long period of sustained economic growth, then climbed to 24.3% just before
the COVID-19 pandemic in March 2020.
A significant influx of
short-term unemployed (unemployed for less than 12 months) in April 2020
contributed to a temporary lowering of the long-term unemployment ratio. The
ratio of 25.2% recorded in March 2022 is slightly above the ratio recorded 2 years
earlier (see Figure 3).
Figure 3 Trends in the long-term
unemployment ratio (seasonally adjusted), 1991 to 2022
Source:
ABS, Labour Force, Detailed, (Canberra: ABS,
May 2022).
The OECD refers to the long-term unemployment rate when measuring the proportion of unemployed people
who have been looking for work for 12 months or more. At a rate of 19.4% in 2018 Australia was ranked 8th lowest out of the 30 OECD members that
provided data for this measure. Canada, the US and New Zealand had
lower rates at 10.1%, 13.3% and 13.6% respectively.
Underemployment
Figure 4 shows the steady
increase in numbers of underemployed workers between early 2008 and early 2020,
almost doubling from 643,200 to just over 1.2 million. Underemployed workers are employed people who want and are available to
work more hours. Some workers may only be seeking a small number of additional
hours per week while others may be seeking significantly more. The number of
underemployed Australians recorded in March 2022 (at 882,300) is below the
number recorded in March 2020 prior to the pandemic (at just over 1.2 million)
and well below the spike of 1.8 million recorded in April 2020 immediately
after the first lockdowns were imposed.
Figure 4 Number of underemployed
workers (seasonally adjusted), 2008 to 2022
Source:
ABS, Labour Force, Australia, (Canberra: ABS, May
2022).
The underemployment rate
is the number of workers who report they are seeking and available for more
hours of work as a proportion of the labour force. The data shows an increasing
trend in the underemployment rate for both males and females since the early
1980s, and the gap between the 2 genders has changed little in that time (see
Figure 5). Women are more likely than men to be seeking part-time hours of work,
with many trying to juggle work with child caring responsibilities. The number
of hours offered by employers to underemployed part-time workers may not be
sufficient for their individual needs.
The female underemployment
rate increased from 10.6% in March 2020 to 15.1% in April 2020, but has since
fallen to 7.4% in March 2022. The male underemployment rate followed a similar
trajectory, increasing from 7.2% in March 2020 to 12.6% in April 2020, before
gradually falling to 5.0% in March 2022.
Figure 5 Underemployment rates for
females and males (seasonally adjusted), 1978 to 2022
Source:
ABS, Labour Force, Australia, (Canberra: ABS, May
2022).
Employment, hours worked
and industry jobs
Employment
Women were more adversely
affected by the initial lockdowns to combat the spread of COVID‑19, with female
employment falling by 279,900 (or 4.5%) between March and July 2020. This
compares with a fall in employment of 236,400 (or 4.0%) for men. However,
employment recovered more quickly for women after this point, increasing by
530,700 (9.0%) between July 2020 and March 2022 compared with an increase of
380,100 (5.8%) for men.
Despite the disruptions to
the labour market, total employment in March 2022 was 394,400, or 3.0% higher
than the pre-pandemic level recorded in March 2020 (see Figure 6).
Figure 6 Change in employment for
males and females (seasonally adjusted), March 2020 to March 2022
Source:
ABS, Labour Force, Australia, (Canberra: ABS, May
2022).
Hours worked
Figure 7 shows changes in
the index for total monthly hours worked in Australia between March 2020 and
March 2022. The chart highlights the impact of lockdowns and re-openings
contributing to highly volatile monthly estimates for total hours. Despite these
disruptions the numbers of hours worked recorded in February and March 2022
were above the pre-pandemic level recorded in March 2020.
Figure 7 Index for total hours
worked (seasonally adjusted), March 2020 to March 2022
Source:
ABS, Labour Force, Australia, (Canberra: ABS, May
2022); Parliamentary Library calculations.
Industry jobs
The ABS Weekly Payroll Jobs and Wages in Australia data series can be used to identify industries that
have experienced a strong contraction or growth in jobs since the pandemic
began in March 2020. The data is taken directly from information sent to the
Australian Taxation Office (ATO) by employers with Single Touch Payroll (STP)
enabled payroll and accounting software each time the employer runs its payroll.
The STP data shows some
industries were more affected than others by lockdowns imposed to limit the
spread of COVID-19. Some service industries were hit particularly hard in terms
of job losses, and many have not recovered to their pre-pandemic level despite
the lifting of lockdowns in all states and territories.
Industries that recorded
the largest job losses included Air and Space Transport (jobs fell by 36.3%
between 20 March 2020 and 16 April 2022), Fuel retailing (jobs fell by 16.6%), Food
and Beverage Services (jobs fell by 12.9%), and Accommodation (jobs fell by
9.5%).
Strong jobs growth was
recorded in Social Assistance Services (up 17.6%) as more social workers and
administrative staff processing payments were required to assist people through
the pandemic. One of the biggest increases in jobs was recorded by Internet Service
Providers, Web Search Portals and Data Processing Services (up 24.4%).
Non-store retailing recorded growth in jobs of around 18.6% between 20 March 2020 and 16 April
2022. Non-store retailers include those engaged in retailing goods without the
use of a shopfront or physical store presence, including e-commerce retailers.
Growth in jobs in this sector was related to the increased use of online
shopping by consumers as they switched to other methods of purchasing goods and
services after the forced closures of physical retail locations.
Online retail sales grew from $1.9 billion in February 2020 to $2.9 billion in May 2020,
which contributed to an increase in the online sales share of total retail
turnover from 6.6% to 10.1%. Similar trends were observed between May and
September 2021, with turnover increasing from $2.9 billion to $4.3 billion,
which contributed to an increase in the online sales share to a peak of 15.3%.
Turnover in the sector has since fallen to $3.7 billion in April 2022 (or 10.0%
of total retail sales).
Impact of COVID-19
restrictions on different age groups
Hours worked
Young people experienced
the biggest fall in hours worked as a result of lockdowns, but this group has recorded
some of the biggest recoveries in hours worked since. For example, total hours
worked for people aged 15 to 24 years fell by 16.3% between March and July 2020,
but subsequently increased by 21.2% through to March 2022.
Those aged 25 to 34 years
were the only age group to record a fall in hours worked over the whole 2-year
period between March 2020 and March 2022 (down 2.1%) with those aged 55 to 64 years
and 65 years and over recording the biggest increases (of 6.3% and 11.1%,
respectively) (see Figure 8).
Figure 8 Change in hours worked by
age (original estimates), March 2020 to March 2022
Source:
ABS, Labour Force, Australia, Detailed, (Canberra: ABS, May 2022).
Impact of COVID-19
restrictions on casual and permanent employees
Casual employees (or employees without paid leave entitlements) were more likely than permanent employees (employees with paid leave entitlements) to lose their job or hours of work due to economic
shutdowns imposed after March 2020 to limit the spread of COVID-19.
ABS data shows there were
314,500 fewer casual workers in August 2020 compared with February 2020. The
number of permanent employees fell by 124,300. There was very strong growth in
permanent employees between August 2020 and February 2022 resulting from the
lifting of trading restrictions (up 528,000), more than double the increase in
casual workers (up 253,700). Numbers of casual workers had still not returned
to pre-pandemic levels in February 2022 (down 60,900 or 2.3%) whereas the
number of permanent workers was 403,700 higher (up 4.9%) (see Figure 9).
Similar trends were
observed in total hours worked, which fell by 16.5% for casual workers between
February 2020 and August 2020 compared with a fall of only 3.9% for permanent
employees. Hours worked for permanent employees were 3.6% higher in February
2022, compared with 2 years earlier while casual employees’ hours worked was up
only 0.5%.
Figure 9 Change in number of
employees with and without leave entitlements, February 2020 to February 2022
Source:
ABS, Labour Force, Australia, Detailed, (Canberra:
ABS, April 2022).
The greater likelihood of
casual workers losing their job during the pandemic has had a noticeable impact
on the casual employee share of total employees in Australia, which fell from 24.1%
in February 2020 to 20.6% in May 2020. Despite growth in the number of casual
employees since, the casual share stood at 22.8% in February 2022, which is
below their pre-pandemic share.
Trends in job vacancies
Another indicator of the
strength of the labour market is job vacancies. The ANZ job advertisement series has been available since the late 1990s. The job
advertisement data is sourced from advertisements listed on seek.com.au and jobsearch.gov.au.
In April 2022, a total of 242,540 ANZ job advertisements were recorded
which is well above the pre-pandemic level of 152,800 in February 2020 (up
89,650 or 58.7%) (see Figure 10). SEEK reported
that Queensland recorded the biggest increase in job advertisements in the year
to April 2022 (up 30.7%), while the weakest growth was recorded in the ACT (up
7.3%).
Figure 10 ANZ Job Advertisement series,
1999 to 2022
Source:
Parliamentary Library calculations using ‘ANZ Australian Job Advertisement series’.
The tightening of the
labour market is also indicated by the decline in the ratio of unemployed people per internet vacancy listed, which has fallen from just over 4 unemployed people
in February 2020 (just before the impact of the pandemic) to 2 unemployed people
per vacancy in March 2022. In other words, employers had half as many
unemployed people available per vacancy in March 2022 as they did just prior to
the pandemic.
Conclusion
The Australian labour
market has experienced significant shifts since the pandemic began in March
2020. Despite impacting on various demographic groups and some industries more
than others, the labour market has recovered strongly with unemployment at a
rate not seen since the mid-1970s. Some headwinds exist with the demand for
labour being exceptionally strong compared with labour supply. This has been
exacerbated by the restrictions on migration during the pandemic. The
combination of skills shortages for occupations in particular industries and
higher inflation may trigger stronger wage growth in the short to medium term.
Further reading
James Bishop and Iris Day, How Many Jobs did JobKeeper Keep?, Research discussion paper, RDP 2020–07, (Sydney: Reserve Bank of Australia, 2020).
Jeff Borland, Can Australia Achieve a Soft Labour Market Landing?, (Labour Market Snapshot, 88, Department of Economics, University of Melbourne, May 2022).
Geoff Gilfillan, COVID-19: Labour Market Impacts on Key Demographic Groups, Industries and Regions, Research paper series, 2020–21, (Canberra: Parliamentary Library, 2020).
Geoff Gilfillan, COVID-19: Impacts on Casual Workers in Australia- a Statistical Snapshot, Research paper series, 2019–20, (Canberra: Parliamentary Library, 2020).
Reserve Bank of Australia (RBA), Statement on Monetary Policy, May 2022, (Sydney: RBA, 2020).
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