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Unemployment now lowest in almost 50 years, but wages growth subdued
20 May 2022
The labour market tightened further in April, with Bureau of Statistics data showing a further 4,000 new jobs added in the month, with 13.4 million people in work.
After much expectation that it would occur last month, the unemployment rate has now fallen below 4 per cent to 3.9 per cent, its lowest level since Gough Whitlam was in government in 1974.
Labour shortages are clearly showing in the data with a notable shift from part-time work to full-time work, with 92,400 full-time jobs created and 88,400 part-time jobs lost. This transition has been very strong in recent months, with 228,450 full-time jobs created and 92,800 part-time jobs lost since the beginning of 2022.
Also of note, hours worked bounced back, up 1.3 per cent to a high of 1.83 billion hours, after a dip in the March quarter due to the flooding in NSW and Queensland. This was despite increasing COVID-19 infection rates which is driving staff absenteeism the highs experienced in January when the COVID omicron outbreak was at its peak.
There was a slight softening in the participation rate, down to 66.3 per cent, as 7,000 people left the labour force. While still high by historic standard, with the labour and skill shortage, the challenge ahead is to retain and increase participation in the workforce.
Despite the pressure in the labour market, wages growth was modest in the March quarter, with the ABS wage price index rising 0.7 per cent for the March quarter, to an annualised 2.4 per cent. This fell short of expectations of a 1 per cent increase for the quarter, equating to approximately 2.6 per cent for the year.
Over the past year, wages growth has been strongest in sectors facing the greatest skill shortages, particularly rental hiring and real estate services (WPI up 3.1 per cent), professional scientific and technical services (2.7 per cent), manufacturing (2.7 per cent), and information media and telecommunications (2.7 per cent).
In a market with rising inflation and operating costs, businesses appear to be increasing wages, where they can, to retain staff and attract new staff. They are also looking beyond wages to attract and retain workers, offering bonuses, allowances, and other non-base wage payments.
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