The unemployment rate has increased to 7.1% as of May, the highest since October of 2001. While the 0.7% increase from April reflects a further increase in unemployment by 227,000 within the span of a month, several factors have acted as a buffer against a much larger shock in employment statistics. In particular, the number of discouraged workseekers have increased, with 623,600 individuals leaving the labour force amid worsening job prospects and physical limitations in many occupations. This has curtailed the unemployment rate from reaching a predicted 11.3%, though its impact is more evident in the recent decrease of the labour force participation rate to 62.9%.
Nonetheless, labour demand is expected to pick up as Australia begins its slow journey toward economic recovery, assisted by both the reopening of many domestic businesses and the ongoing support of the JobKeeper program. The burden has been on the government to inject greater fiscal stimulus into the economy in order to further ease labour market conditions through a demand reaction. Namely, policies such as personal tax cuts can bring forward consumption and boost household incomes, expediting the recovery effort. However, with JobKeeper expiring in September, and prevailing uncertainty still plaguing confidence in the economy, the return to normality in the labour market is certainly complicated. Unemployment is expected to remain elevated near a peak of 8% for the foreseeable future.
