- During the pandemic, fewer people moved jobs
- As more jobs now become available, 2.2 million are unemployed and/or not looking
- The RBA will not lift interest rates until wage growth rises
How full is ‘full’ employment? There are always people moving between jobs, people leaving, people being interviewed, being hired.
So full employment does not mean that everyone is in a job, who wants one. You need to have some vacant jobs for those in jobs – but looking to move – to move to.
Economists have argued about this one for centuries, but agreed wisdom is that full employment in Australia is somewhere around the 4.5% unemployment mark. This is what the RBA believes anyway, and their avowed intent is to move the current unemployment rate there from its current 5.1% figure (May 2021).
Only then will wages start to rise into the bank’s 2% to 3% range, and only then might the RBA consider raising interest rates.
Moving on up
Last year, during the first year of the pandemic, fewer people moved jobs in Australia since records began. Understandably, with so much uncertainty, they were hanging on to the jobs they had.
Job mobility measures the percentage of workers that change jobs during a year, and this fell to 7.5%, down from 8.1% the previous year, according to the ABS.
“Job mobility in Australia has been generally trending down for decades and reached a new low during the first year of the pandemic. Around 82,000 fewer people changed jobs than in the year before.”
Bjorn Jarvis, head of Labour Statistics at the ABS
Men were the most affected by the pandemic (their mobility between jobs fell from 8.4% down to 7.5%) whereas women stayed about the same (7.6%, down from 7.8%).
Job mobility fell across the board, the largest falls were in management (7.3% down to 5.2%) and professionals (8.0% to 6.5%). These jobs were among those least affected by the pandemic.
Mobility among jobs increased most for labourers (7.7% up to 9.2%) and community workers (8.6% to 9.7%). The accommodation and food industry also saw more movements between jobs (up to 17.1%) and real estate (11.3%).
People were more likely to change their industry (59%) than their occupation (47%).
The ‘real’ unemployed
Among the unemployed are two main categories: those who count as ‘unemployed’ in ABS surveys (actively looking for work yet out of work), and those who are not actively looking, but are out of work and could work.
This latter group (1.4 million people) is larger than the former (800,000).
Technically then, there are 2.2 million people not in the labour force, who could be, and it’s from these that employers seeking staff to fill vacancies must look. There are few alternatives, as there will be very few – if any – flying in from overseas on migrant visas for some time yet.
Imperfect market
Despite there being more job vacancies (362,500 in May 2021 – an increase of 23.4% from February) and – potentially – 800,000 people to fill them, almost nine out of every ten unemployed people (88%) reported having some difficulty finding work.
“The most common reasons reported were too many applicants for available jobs (21%), insufficient work experience (14%), ill-health or disability (11%) and no vacancies in their line of work (10%),” Mr Jarvis said.
Often, the jobs are not located near the pool of available workers. The jobs market is not a perfect market, with perfect information and a perfect way of matching people to jobs and companies to available staff. Only a third of jobs are even advertised.
As the economy continues to improve, and we get to a stage where there are more jobs out there than people willing and able to take them, so wages may have to rise to attract some off the sidelines.
It’s at this stage, we move to another phase of the market. No doubt, the RBA will be watching these numbers very closely.
