- Australia’s unemployment rate sits at the lowest level in nearly seven years. The proportion of the workforce either in a job or looking for work also sits near decade highs.
- Strong growth in businesses linked to the gig economy is one factor that may be contributing to these trends.
- According to Commsec, over a third of all new businesses created in Australia over the past year were in the transportation sector. This includes ride-sharing businesses like Uber.
- The growth in these types of businesses could be either a good or bad sign for the economy, depending on who you ask.
The proportion of working-age Australians either with a job or actively looking for work currently sits near the highest level in a decade.
Employment also sits at record highs while the unemployment rate, at 5%, is back at levels not seen since the middle of 2011.
While there are a number of forces driving these trends, including an improvement in the Australian and global economies over recent years, there’s another factor that may help to explain why so many Australians are currently employed: the rise of the gig economy, in particular, driving jobs such as Uber.
These two charts from Commsec are eye-opening to say the least, fitting with anecdotal evidence so many of us see on the streets of the capital cities across the country.
The first shows the growth in “taxi and other road transport” businesses based on data released by the ABS. According to Commsec, this category includes ride-sharing businesses.
The second measures the growth in “other transport support services” businesses, those unclassified by the ABS.
The former category has seen business numbers soar by 39.1% over the past three years, and the latter by 29.4% over the same period.
Somewhat remarkably, Commsec calculates that over a third of all new Australian businesses in the year to June last year came from the transportation sector alone.
Craig James, Chief Economist at Commsec, says the growth in these types of businesses should be celebrated, rather than bemoaned.
“The continued increase of the gig economy highlights the extra work and income undertaken by Aussie workers,” he said.
“The growth in the sector raises questions about whether the activity is being fully picked up by economic growth estimates. The traditional job market has been strong, but this hasn’t been totally reflected in economic growth numbers. This disconnect has had RBA policymakers rubbing their collective heads.
“The gig economy also suggests that the job market may be even tighter than shown by traditional estimates like the jobless rate.”
While Australians who want to work being able to find work is undoubtedly a good thing, the growth in these types of businesses may reflect that economic conditions aren’t as strong as official figures would suggest, forcing some — some — to work in the gig economy given a lack of opportunities in traditional areas.
Certainly underemployment in Australia — measuring the proportion of the workforce with a job but who would like to work more hours — still sits at elevated levels in comparison to periods in the past.
This is especially so among young Australians, those who are just entering or have limited experience in the workforce.
Elevated levels of underemployment are one factor behind sluggish wage growth in Australia in the post-GFC era, meaning current year-ended growth in average hourly wages, at 2.3%, is well below the levels seen when Australia’s unemployment rate sat at similar levels in the past.
Weak growth in wages has also flowed through to growth in household incomes, keeping consumer spending subdued despite a steep decline in the proportion of disposable income being saved by the average household.