The Australian, January 19, 2018
Almost 75 per cent of the working-age population now has a job, exceeding the levels reached during the peak of the resources boom, after strong demand from employers generated 400,000 new positions over the past year.
Employment growth in 2017 was the best in a decade as business cast off the caution left by the global financial crisis and started lifting investment.
The jobs growth last year was almost four times the 109,000 positions generated in 2016.
The December labour force report from the Australian Bureau of Statistics showed an additional 34,700 people gained work in the month, which made for 15 consecutive months of rising employment.
Malcolm Turnbull yesterday hailed this as the best run of unbroken jobs growth in the normally volatile ABS labour force reports since 1978.
“Jobs and growth — the slogan for 2016 — was a big outcome this year,” the Prime Minister said during his visit to Japan.
More than 300,000 of the new positions, or 75 per cent, were full-time, reversing a worrying trend of predominantly part-time employment growth. From 2012-16, more than two-thirds of jobs growth was part-time.
Employment is growing at double the pace of growth in the working-age population. Demand from employers is attracting back to the workforce people who had given up on finding a job. The participation rate, which measures the share of the population either with a job or actively looking for one, rose over last year to 65.7 per cent, its highest level since 2011. The increase last year represented an additional 180,000 people joining the labour force.
The figures would be even better were it not for the rising numbers of baby boomers (people born from the mid-1940s to 1964) who are retiring.
Among people of working age, which the ABS classifies as 15 to 64 years, a record 73.6 per cent now have a job.
The flood of people joining the labour force meant the unemployment rate edged higher from 5.4 per cent to 5.5 per cent despite the strong jobs growth.
Economists said the Reserve Bank would want to see the demand for labour translating into higher wage growth and inflation before they started to raise interest rates. However, many expect wages to start lifting over the course of this year.
Commonwealth Bank senior economist Gareth Aird said wage growth would increase as the number of people either without work or with less work than they wanted started to fall. “Wage growth should gradually lift as under-utilisation continues to recede,” Mr Aird said.
He added that this would start to increase inflation.
“A first rate rise since 2010 looks probable this year,” he said.
Financial markets put the chance of a rate hike by August this year at 76 per cent.
Employment outcomes have been strongest for women, who won 60 per cent of the new jobs created last year. The number of women with full-time jobs jumped 5.3 per cent last year, almost double the growth for men.
Elyse Cain, 30, works as the policy lead for health, children and families at the NSW Council of Social Service. She took up the role six months ago, after working in a similar capacity for the Australian Medical Association NSW. She said the rate of women taking up full-time employment was an encouraging sign.
“It’s really fantastic to see that employment is on the rise for women, particularly in the health and social services sectors,” Ms Cain said.
“One of the great things about these industries is there tends to be a fair amount of flexibility in terms of working arrangements which is often conducive to parenting or caring responsibilities”.
While Ms Cain said the spike in female employment was positive, she said more women needed to be encouraged to enter leadership positions in the workforce. “While there are a lot of women employed in these sectors, they aren’t necessarily at those higher leadership levels,” she said.
Jobs growth has been strongest in the female-dominated healthcare and social assistance industry, which added 124,000 positions in the year to November, while retail hired 60,000 additional people and education 40,000. Construction was the strongest male-dominated industry, generating an additional 100,000 jobs, mainly in infrastructure projects and residential building.
JP Morgan senior economist Ben Jarman said both healthcare and construction might fade as a source of jobs growth over the year ahead. He suggested that some of the healthcare employment had been generated by the rollout of the National Disability Insurance Scheme, while building approvals for apartment towers and the pipeline of work on state government infrastructure had peaked.
“It would be unusual for unemployment to decline meaningfully with growth consistently below trend,” Mr Jarman said.
Morgan Stanley economists are also pessimistic about employment growth being maintained. They said much of the growth reflected government-linked employment in sectors such as health, education and public service which had risen by 3.5 per cent over the past year, compared with a 2.2 per cent lift in private sector employment.
Labor employment spokesman Brendan O’Connor said the jobless rate of 5.5 per cent was still too high and was comparable with the peak of the global financial crisis. He said the lift in the jobless rate highlighted “the persistent challenges of underemployment and low wages growth under Turnbull and his Liberals”.
However, many economists are more optimistic. The jobs growth has been shared around the country with 140,000 new jobs in NSW last year, 100,000 in Queensland, 88,000 in Victoria, 50,000 in Victoria, 40,000 in Western Australia and 13,000 in South Australia. Both Tasmania and the ACT have had good employment growth, with only the Northern Territory showing a small decline.
West Australian Deputy Premier Roger Cook said the gains in employment in the state over the past year showed the economy was “turning in the right direction.”
Employment had been falling in Western Australia until December 2016, but grew strongly in the final two months of last year.
National Australia Bank chief markets economist Ivan Colhoun highlighted the improved jobs growth in Western Australia and noted that job advertising on the recruitment service Seek had been showing improving trends in Queensland, South Australia and Western Australia. He said that, if sustained at a rate of 25,000 to 30,000 a month, the employment growth should bring reductions in the unemployment rate over the year ahead.
Nationally, the unemployment rate has shown only a small improvement from 5.8 per cent to 5.5 per cent over the past 12 months.