The unemployment rate has largely declined since November 2020, falling to 4.5% in August 2021. This is the lowest level in 13 years but is not indicative of the complete state of the labour force. The reimposition of lockdown restrictions in New South Wales and Victoria has caused increases in the underemployment rate over the three months through August 2021. The underemployment rate accounts for people who are employed but would like to work more hours.
The underemployed
Extended periods of lockdowns in New South Wales and Victoria are hampering many Australians’ work prospects. A significant portion of unemployed people withdrew from the labour force altogether and were no longer reflected in the latest unemployment rate. In contrast, the number of hours worked has become a better indicator of the overall health of the labour market. The increased prevalence of skill shortages in the aftermath of the pandemic has discouraged employers from laying off staff, with many instead cutting shifts in line with a reduction in trading hours and demand.
As of August 2021, the total hours worked decreased by 51.0 million hours when compared with a pre-COVID-19 period of March 2020. Nevertheless, the ongoing vaccine rollout and the pathway out of lockdowns will likely boost the number of hours worked over the coming months. The average weekly hours worked is expected to rise by 0.6% in 2021-22. In particular, remote working arrangements and increased internet use among retail clients are driving demand for electronic information storage and retrieval services. Consequently, employment in the Cloud Storage Services industry is anticipated to rise by 8.7% in the current year.
Meanwhile, the underemployment rate has fluctuated but increased overall, to 9.3% of the total number of people in the labour force. In particular, women’s unpaid workload, which includes housework and caring responsibilities, has increased during the pandemic, prompting most employed women to either reduce their paid hours or drop out of the workforce. The number of female workers has decreased as a share of total part-time employees, dropping from 68.3% in March 2020 to 67.8% in August 2021.
The rise of multiple job holding
The number of Australians that are juggling at least two employers has grown during the pandemic. The multiple job holding rate rose to a historical high of 6.5% in the June quarter 2021. Several factors have contributed to the rising number of workers holding multiple jobs, including trends among younger Australians to work more flexible hours, the rise of the gig economy, and the shortage of skilled workers among employers in regional areas and certain occupations, such as chefs, civil engineers, and software and applications programmers.
The past year has highlighted that demand for labour can recover promptly following minimal COVID-19 outbreaks and easing restrictions. An increase in the number of businesses in Australia is anticipated to boost demand for employment recruitment services in the current year. The Employment Placement and Recruitment Services industry is expected to expand over 2021-22, with revenue anticipated to rise by 4.2%. Business optimism is expected to encourage firms to take on additional projects, and engage in product development or business expansion, creating more job opportunities for Australians.
Future of work
The total number of employees in the labour force is forecast to rise over the next five years, fuelled by stronger economic activity, and positive consumer sentiment and business confidence. The number of businesses is also projected to expand over the period, increasing the pool of firms requiring employees.
In particular, Aged Care Residential Services and Cloud Storage Services are forecast to record strong employment growth over the next five years, with employment numbers rising at an annualised 6.2% and 5.2%, respectively. An increase in the Australian population aged 70 and older is likely to drive growth in the Aged Care Residential Services industry, while a greater number of internet connections will likely bolster demand for cloud storage services. Other Health Services and Child Care Services are also projected to drive growth in the labour force participation rate over the period.
Alfabank-Adres reports used to develop this release:
