Employment & underemployment


Australia’s unemployment rate dipped 0.1% in September, falling to 5.2% as Australia chalked up a record thirty-sixth consecutive month of jobs growth. In what appears to be a moment of clear air for a besieged Reserve Bank of Australia, the minor dip in the unemployment rate stalled talk of an immediate further interest rate cut.

It is worth remembering that Australia’s unemployment rate was a decadal low 4.9% in February 2019, as the chart below shows, and it had pushed up slowly since then, in response to an economy that has clearly been slowing.





To go straight to the dashboard and take a closer look at the data, click here.

A slight drop in the number of people unemployed (709,600) saw the unemployment rate drop from 5.3% to 5.2% in September. However, that needs to be tempered by the fact that this was mainly driven by a drop in the participation rate which fell from 66.2% to 66.1% in the period. The participation rate measures those people who are either in work or are actively seeking work. Essentially, more people gave up looking for a job in September than got one.

A small drop in the underemployment rate was also recorded in September. The measure of the number of people in a job but who want more hours, fell to 8.3%.

So, slightly more (about 14,700) people in employment and an increase in the number of people satisfied with their hours, but a fall in the number of people actively engaged in the labour market.



To go straight to the dashboard and take a closer look at the data, click here.


At 2.5% for the year-ended September, Australia’s jobs growth is stable, but is under pressure. Employment surveys suggest growth in the number of jobs will fall to around 2% by the start of 2020. That is lower than the rate of growth in the number of people able to work, with the delta between the two being higher unemployment or at least, higher underemployment.

Neither outcome would be good for the Australian economy.

Economies that grow solidly and in a stable manner typically have lower rates of unemployment, with a larger proportion of those in work being satisfied with the hours they receive. Those factors feed into a capacity to consume because households have incomes they need.

The lingering risk of sluggish jobs growth – and the prospects that jobs growth will slow over the next year or more – is one of the factors that has driven interest rates lower. The related factor is that when unemployment and underemployment are a little too high, as the chart below shows, those in work have reduced bargaining power. That means wages increases are harder to come by, which also drags on consumption and economic growth.





To go straight to the dashboard and take a closer look at the data, click here.

It is little wonder the Government is being encouraged to open the national wallet and recognize that a surplus for a rainy day may be less important than addressing the current

economic deluge.