18 June 2018
Bob Cunneen, Senior Economist and Portfolio Specialist
Australia's labour market
Sources: Reserve Bank of Australia, Australian Bureau of Statistics.
Australia’s labour market has been strong over the past year to May 2018. Encouragingly the economy has generated 304,000 new jobs. Even Australia’s unemployment rate has managed to gradually fall to 5.4 % (black line). This is essentially the lowest unemployment rate since 2012.
However Australia’s underemployment rate remains high at 8.5% (red line). This underemployment rate measures those ‘part-time workers wanting more hours’. A high underemployment rate indicates that the labour market still isn’t generating sufficient work opportunities.
This underemployment rate has important implications for wages growth and inflation. Reserve Bank of Australia Governor Philip Lowe noted on 13 June 2018 that “there is still spare capacity in the labour market.” Until this spare capacity of underemployment declines with increasing work opportunities, Australian wages growth and inflation pressures are likely to remain subdued.
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