Australian Employment Market Update
- Employment increased 22,600 to 12,501,000. Full-time employment increased 32,700 to 8,543,400 and part-time employment decreased 10,000 to 3,957,700.
- Unemployment increased 10,600 to 741,000. The number of unemployed persons looking for full-time work decreased 17,100 to 506,100 and the number of unemployed persons only looking for part-time work increased 27,600 to 234,900.
- Unemployment rate increased by 0.1 pts to 5.6%.
- Participation rate increased by 0.1 pts to 65.6%.
- Monthly hours worked in all jobs increased 19.4 million hours (1.11%) to 1,764.0 million hours.
The Australian Bureau of Statistics released the latest showed that the Australian labour market remains in a weak state even though full-time employment grew. Over the first four months of 2018, the labour market is decidedly weaker when compared to 2017.
By Bill Mitchell
The estimates for the April 2018 show that underemployment fell slightly to 8.3 per cent. The total labour underutilisation rate (unemployment plus underemployment) was slightly lower as a consequence at 13.9 per cent. There were 1,104.7 thousand persons underemployed and a total of 1,844.7 thousand workers either unemployed or underemployed.
Employment growth – positive but weakness continues
Employment recorded another modest increase at 22,600 with full-time employment increasing by 32,700 and part-time employment decreasing by 10,000. This reversed the results from last month when full-time fell and vice versa.
We observed a zig-zag pattern in total employment growth up until the end of 2016 switching around the zero growth line. The oscillating pattern has continued into 2017 but the level has risen above the zero line.
The following graph shows the month by month growth in full-time (blue columns), part-time (grey columns) and total employment (green line) for the 24 months to April 2018 using seasonally adjusted data.
It gives you a good impression of just how flat employment growth had been leading into 2017.
And the trend is decidedly down in the first months of 2018.
Overall: today’s result signals a sustained weaker labour market.
The following table provides an accounting summary of the labour market performance over the last six months. The monthly data is highly variable so this Table provides a longer view which allows for a better assessment of the trends.
Overall there have been only 152.3 thousand jobs (net) added in Australia over the last six months while the labour force has increased by 188.7 thousand. The result has been that unemployment has risen by 36.4 thousand.
Given the variation in the labour force estimates, it is sometimes useful to examine the Employment-to-Population ratio (%) because the underlying population estimates (denominator) are less cyclical and subject to variation than the labour force estimates. This is an alternative measure of the robustness of activity to the unemployment rate, which is sensitive to those labour force swings.
The following graph shows the Employment-to-Population ratio, since February 2008 (the low-point unemployment rate of the last cycle).
It dived with the onset of the GFC, recovered under the boost provided by the fiscal stimulus packages but then went backwards again as the last Federal government imposed fiscal austerity in a hare-brained attempt at achieving a fiscal surplus.
The ratio began rising in December 2014 which suggested to some that the labour market had bottomed out and would improve slowly as long as there are no major policy contractions or cuts in private capital formation.
The series turned again as overall economic activity weakened.
The ratio was steady in April 2018 at 61.9 and remains well below pre-GFC peak in April 2008 of 62.9 per cent.
To put the current monthly performance into perspective, the following graph shows the average monthly employment change for the calendar years from 2005 to 2018 (the 2018 result is up to April only).
It is clear that after some lean years, 2017 was a much stronger year if total employment is the indicator.
It is also clear that the labour market has weakened considerably in the first three months of 2018.
To provide a longer perspective, the following graphs shows the average monthly changes in Total employment (upper panel), and Full-time and Part-time employment (lower panel) in thousands since 1978 (when the current dataset began).
The 2018 average is for January and February only so is not definitive.
The interesting result is that during recessions or slow-downs, it is full-time employment that takes the bulk of the adjustment. Even when full-time employment growth is negative, part-time employment continues to grow.
Unemployment decreased 10,600 to 741,000
The official unemployment rate increased by 0.1 points to 5.6 per cent in April 2018 on the back of the subdued employment growth and a rising participation rate.
The following graph shows the national unemployment rate from February 1978 to April 2018. The longer time-series helps frame some perspective to what is happening at present.
After falling steadily as the fiscal stimulus pushed growth along, the unemployment rate slowly trended up for some months.
It is now still 0.7 points above the level it fell to as a result of the fiscal stimulus and 1.5 points above the level reached before the GFC began.
Conclusion: there is still considerable slack in the labour market that should be absorbed with fiscal stimulus.
Hours worked – increased by 19.4 million hours (1.11 per cent).
The hours data was strong this month and reflected the dominance of full-time employment in the result.
The following graph shows the monthly growth (in per cent) over the last 24 months. The dark linear line is a simple regression trend of the monthly change – which depicts an modest upward trend – distorted somewhat by the outlier in May 2017 (the trend would have been more sharply downward without that positive spike).
You can see the pattern of the change in working hours is also portrayed in the employment graph – zig-zagging across the zero growth line although less so in 2017.
April records industry-wide growth in job ads
Written by SEEK Employment Reports
Job ads on SEEK recorded a rise of 16.5% in April compared to the same time last year and experienced a modest month-on-month growth of 1%.
SEEK data has revealed that every industry recorded positive year-on-year growth this month, with Mining, Resources & Energy leading the way with 62% growth compared to April 2017.
Community Services & Development was also a key contributor, recording 49% year-on-year growth.
Queensland, Victoria and New South Wales were responsible for the majority of the new job ads in Community Services & Development (82%). The key occupation driving growth in Community Services was Aged & Disability Support, which made up 33% of the new job ads in April 2018 compared to 12 months prior. This was followed by Employment Services (27%) and Child Welfare (16%).
The Productivity Commission forecasts that Australia may need almost one million aged care workers by 2050 if it is to meet the anticipated demand from ageing baby boomers.
Kendra Banks, Managing Director SEEK ANZ says the strong growth in community services has predominately been driven by a high demand for aged and disability support workers. “This is thanks in part to Australia’s ageing population,” Banks says.
“It’s also driven by the country-wide roll out of the National Disability Insurance Scheme (NDIS) which has had a positive impact on job ad growth over the past two years.”
Economists at Goldman Sachs estimate that around 50,000 jobs were created as a result of the NDIS in 2017, and another 100,000 may be expected by 2020. This is supported by SEEK data that shows a significant increase in new job ads in both Community Services and Healthcare in April 2018 compared to the same time last year.
Trends across the country
Year-on-year job ad growth was recorded across every state and territory in April, with Tasmania topping the rankings with 35% growth compared to April 2017. The Apple Isle’s growth was largely driven by growth in the Insurance & Superannuation, Human Resources & Recruitment and Legal industries.
The Northern Territory also experienced significant growth of 24.2% year-on-year, while Victoria recorded 20.9% growth.
There were only two regions below the national average of seasonally adjusted year-on-year growth in April: New South Wales, where job ad growth was up 12.8%, and the ACT which saw an 8.3% growth in job ads.
The following map details the job ad growth experienced across the nation compared to 12 months ago.
The average annual salary came in at $84,686 in April, signalling 3.1% growth compared to the same time last year. There was also year-on-year monthly salary growth across all but one region, with the Northern Territory recording a 0.7% decline.
Tasmania experienced the greatest growth, with average salaries increasing by 5.9% to $77,207 compared to 12 months ago. Western Australia followed closely with 5.4% growth, with average salaries increasing to $87,765.
Industry growth: Australia’s biggest employer
Healthcare is Australia’s biggest employer and it is getting even bigger, accounting for 13.7% of the entire workforce (as of February 2018).
According to the Department of Jobs and Small Business ‘Australian Jobs 2018’ report, the Healthcare & Social Assistance industry is projected to grow a further 16.1% over the next five years.