- The latest job vacancy figures show the Australian labour market is in worse shape than it was last year, as the ratio of unemployed people to vacancies shoots up to 3.
- Indeed Asia-Pacific economist Callam Pickering said the data highlights the “clear risks surrounding Australia’s labour market and unemployment rate” which despite the Reserve Bank of Australia’s (RBA) best efforts won’t fall.
- The weakness not only locks nearly 2 million Australian out of work or additional hours, but also undermines any chance of a pay rise for employees.
- Visit Business Insider Australia’s homepage for more stories.
Too many job seekers, not enough jobs.
That situation has been a major thorn in the Australian economy’s side and isn’t going anywhere, according to the latest figures.
“The latest job vacancies data paints a clear picture of an economy and labour market that is stagnating,” Indeed Asia-Pacific economist Callam Pickering said in a note supplied to Business Insider Australia.
Job vacancies increased 1.6% over the quarter, just offsetting the same-sized decline last quarter. It leaves Australia’s labour market in a worse position than just 12 months ago, with Pickering noting “clear risks surrounding Australia’s labour market and unemployment rate”.
“The number of unemployed people per job vacancy remained at 3 in November… up from 2.8 people a year ago. Include the underemployed and that number jumps to 7.8 people,” he said.
“Australia’s unemployed face a very simple equation: Australia isn’t creating enough jobs. And when it does, it doesn’t create enough full-time opportunities.”
While it’s not the worst ratio the country has seen in recent history, it does show the job market is struggling to provide for Australians in need of work.
Not least of which as the bushfire crisis takes an economic toll.
“There is a risk that labour market data may be compromised in coming months from the impact of Australia’s bushfires,” Pickering said. “The monthly ANZ job advertisement series, a more timely measure of vacancies, saw large declines in December that have been attributed to the bushfires. Economic growth remains poor and surely won’t be helped by the bushfires, at least not in the near-term.”
Higher unemployment hurts everyone
A weak job market has serious ramifications for all, no matter your employment status.
It means more than 700,000 unemployed Australians can’t get jobs no matter how qualified they may be for one. It means 1.15 million underemployed Australians can’t get the full-time hours, the job security or the consistent paycheck they need.
If you’ve got a steady nine to five, a weaker job market hurts you too and the country’s economic manager, Reserve Bank of Australia (RBA), knows it. It has stated in no uncertain terms that wages will continue to stagnate until the unemployment rate falls below 4.5%.
Even as thousands of extra jobs have been created, the growth in the number of jobseekers has outpaced it, causing unemployment to hover around the 5.2% mark. The result being that the cost of living outpaces your paycheck, leaving you with less money in your pocket – a horrid scenario for anyone.
It’s one of the big reasons the RBA has been slashing the official interest rate, currently wallowing at 0.75%. Such moves cut the earning potential of savings and fixed-term deposits in Australia, while also typically helping weaken the Australian dollar.
In turn, it makes it cheaper to borrow, flooding the housing market with cash and driving prices up in turn. While that might suit owners and investors, it’s less than ideal if you’re trying to buy, with a floundering salary no less.
As the job market continues to look unsteady, economists are banking the RBA will keep cutting interest rates further in the coming months.
“We believe that the RBA will cut rates again early this year, with a February move currently a coin-flip,” Pickering said.
It’d be nice if the strength of the economy was closer to a sure thing.
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