Australia’s near-record low unemployment stokes staffing crisis
Australia’s unemployment rate has fallen to its lowest level in nearly 50 years, putting pressure on businesses struggling to find work.
Unemployment fell to 3.5 percent in June, down from the 3.8 percent economists forecast. In 1974 the unemployment rate fell to 2.7 percent.
Data released Thursday showed 88,000 more people were employed in June than the month before and the employment rate hit an all-time high of 66.8 percent.
According to the Australian Bureau of Statistics, the number of unemployed in the country is now almost equal to the number of vacancies at around 500,000. That compares to a ratio of about 3 to 1 before the pandemic.
Australia is gripped by a labor shortage that has often pitted businesses and public service against each other in the struggle to find enough workers.
“The drop in unemployment is very good news, but the gap between the number of unemployed and job vacancies has narrowed to just 14,000, highlighting the seriousness of the jobs. [staffing] crisis,” said Andrew McKellar, chief executive of the Australian Chamber of Commerce.
The shortage has affected both skilled and unskilled workers and has had a knock-on effect on supply chains, tourism and mining, as well as airports, where chaotic scenes have become commonplace due to staff shortages.
The Labor government, elected in May, has convened a jobs summit for September ahead of an October budget.
Prime Minister Anthony Albanese, who is attending a Pacific leaders’ forum in Fiji, has held bilateral talks with island states on visa and migration policies for workers.
Jennifer Westacott, chief executive of the Australian Business Council, said Canberra needed to increase migration and expand its long-term work visa pool to address chronic staff shortages.
“A lack of workers puts a brake on new projects and stifles investment. You can’t hire hundreds of Australians if you don’t have a surveyor and you can’t tender for a new project without engineers or workers,” she said.
Robert Carnell, regional head of research at ING, said labor figures would increase pressure on the Reserve Bank of Australia to continue raising interest rates quickly.
“This month the unemployment rate was expected to fall, but not the magnitude recorded,” he said. “A drop to 3.5 percent looks really shockingly tight.”
New Zealand has consistently raised interest rates since October, including a further 50 basis points rise this week to 2.5 percent. Australia has been more cautious, but has raised the rate to 1.35 percent since May. Low unemployment, coupled with rising inflation, has made a further rise more likely, economists say.