The unemployment rate and the jobs market

What’s the real story behind Australia’s record low unemployment rate and how will affect people on the hunt for a new job?

It’s been hard to miss the number of headlines heralding Australia’s unemployment rate, which is now at its lowest level in 50 years, at 3.5 per cent. 

But it’s not just as simple as this one figure, there’s more going on than it first appears.

Almost 90,000 jobs were added in the three months to June. But there is also a record high proportion of vacant jobs, at 3.4 per cent. This has in part been driven by a large proportion of the workforce that left Australia during the COVID-19 border shutdowns. 

Higher absentee rates due to COVID-19 – they were higher in the first six months of 2022 than the same months in previous years – could also be affecting the unemployment rate. 

“It’s likely some employers are needing to hire extra workers to cover for increased rates of absenteeism due to COVID-19 or the flu adding to demand,” writes Jeff Borland, professor of economics at University of Melbourne.

There are also specific industries struggling to attract and retain staff, including hospitality, where ranks were decimated by the exodus of foreign workers including backpackers and students. 

So what does this all mean? 

Experts agree that we’re heading into a period of extreme cost of living pressure. Higher interest rates, fuel prices and energy bills will mean that less people are looking to change jobs. This may mean less competition among qualified candidates. But fewer candidates will mean wage inflation to attract staff. Could this mean that headcounts will need to be reduced? Time will tell.