Economic shorts: The Labour Force Redeploys

But the unemployment rate has reached its lowest level in almost half a century at 3.5 per cent. And it’s likely to get below 3 per cent with almost half a million job vacancies still to fill.

While we do see the economy slowing below trend in 2023 and 2024 as rates bite, we at ANZ Research are quite positive about the near-term outlook. The very strong labour market means it’s hard to see a sharp deterioration in the Australian economy any time soon.

Participation – which measures those people who are employed or available to work and  actively looking for a job - is at a record high. Women have been the main driver of this with female participation picking up really strongly during the pandemic recovery.

We think one of the reasons for that is lower barriers to finding employment, particularly for women with young children. The shift to remote working and more flexible arrangements is actually enabling more women in particular to work.

Employment change by family member and gender

Moreover, the tight and tightening labour market should also make it easier for those who often face higher barriers to finding a job – for example lower skilled, young people or the long term unemployed – to be successful.

Job vacancies per unemployed person

Now a tight labour market may make it tougher for business to find staff but the over-arching story is positive: more people with jobs, earning higher wages and more income, means more aggregate demand for the products and services business provides.

Catherine Birch is senior economist at ANZ