Strong start for job growth- May 2023
The Albanese government has been praised for achieving the “strongest start for jobs growth for any new Australian government in history” as it progresses into its second year in power. This impressive surge in job growth is evident in the Treasury analysis released by Jim Chalmers’ office, which shows 333,000 more Australians were employed in April 2023 than in May 2022. The surge in job growth comes on the back of the nation’s recovery from the early stages of the COVID-19 pandemic, which saw dampened economic conditions as Australia closed its borders .
Accordingly, this positive momentum has led to the economy nearing full employment as the Australian Bureau of Statistics reported a 3.7% unemployment rate in April. This rate falls just below the non-accelerating inflation rate of unemployment (NAIRU) of approximately 4.5%. Correspondingly, wages growth has positively responded to the tight labour market as the same Treasury analysis shows 60% of jobs recorded a higher wage rise than the year before, to the March quarter. This figure is almost double the pre-pandemic average of 32.5% recorded in 2019. It has also been estimated that the average full-time worker has seen a $1,000 increase in earnings compared to what would have been expected under the previous government.
Although Australians are pleased with the economic outcomes seen over the past year, inflation remains an issue and must be addressed in order to secure real wages growth for those in the workforce. Accordingly, in order to lower the 7% inflation rate back into the RBA’s 2-3% target range, the Bank has been monitoring the pace of wage growth as too much pressure from worker pay rises is a marker of persistent inflation. The RBA is said to be comfortable with wages growth to stay between 3.5-4% as it seeks to return inflation to target by mid-2025.