KPMG Chief Economist, Dr Brendan Rynne comments on today’s employment figures
Today’s unemployment figures were encouraging – but we should wait a little before opening the champagne.
The March quarter survey took place before the ending of JobKeeper on March 28 – so it will only be in next month’s figures that we will start to get an early sign of the effects of the withdrawal of the program which has been so central to Australia’s economic resilience over the past 12 months. What we can say however is that we haven’t seen evidence of much, or any, pre-emptory labour shedding by businesses prior to the ending of Jobkeeper.
While KPMG anticipate job losses will occur as a consequence of the wage subsidy programme ending, we are not expecting to see job figures ‘falling off a cliff’ next month either. This is because many businesses have been able to assemble cash buffers during the pandemic as two of their larger cost items – being wages and rent – have been reduced as a result of Jobkeeper and reaching arrangements with their landlords.
What is also worth noting is that job vacancies in Australia are at an historic peak, further indicating businesses are increasingly confident on the immediate economic outlook. So if the ending of JobKeeper does result in workers losing their current job, it seems the current strength in the labour market should enable those workers to find new employment relatively quickly, with limited impact on the unemployment rate.
Another encouraging sign from today’s ABS figures is that the participation rate in the economy is at its highest on record. This tends to coincide with people’s confidence in the economy – if they feel there is no hope of finding work they effectively drop out of the workforce. Or in this case, the opposite.
There are some less positive elements to today’s figures though. The net job increases in this month was due to part-time jobs; total new employment of 70,000 jobs was the net result of 90,000 new part time jobs and 20,000 full time job losses.
Overall however Australians should feel pleased at today’s figures. No-one 12 months ago would have predicted we would have more people employed today than the number of people employed prior to the onset of the pandemic. However, as any good economist knows, that optimism should be a cautious one.