Dr Brendan Rynne, Chief Economist, comments on today’s ABS employment data
Today’s figures reflect two counterbalancing forces. There has been an immediate impact of the ending of JobKeeper on certain businesses which has seen some job losses, pushing down employment – but there has also been a continuing improvement in the underlying strength and recovery of the economy, which has been pulling up employment.
The net effect of these two forces is a slight reduction in overall employment for this month – but importantly the quality of employment has improved with more employment in full time rather than part time jobs.
It is important to highlight the statistical anomaly in this month’s data too; the fall in the overall unemployment rate is due to a reduction in the workforce participation rate not because there are more people employed in April compared to March.
KPMG expects the consequences of JobKeeper and other support packages ending will play out fully over the next few months. While some businesses will be now able to stand on their own two feet others may have only temporary cash buffers built up from these stimulatory payments and once these are expired the sustainability of those businesses may be questionable.
But it is to be hoped that the ongoing impact on the unemployment rate of the withdrawal of the JobKeeper life support will be more than equalled by the creation of new jobs. Today’s figures give us cause for optimism in this respect.
The fact that the number in full-time employment has risen shows the economy’s structure is sound. When confidence is high, businesses look to retain workers on full-time rather than on a casual or part-time basis.
It seems unlikely though that the labour market overall will strengthen sufficiently to drive wages significantly higher in the near future. Wage growth is expected to remain modest for most sectors but parts of the economy that are experiencing skill shortages will need to offer higher wages to attract the right talent to their businesses.