{"id":10901,"date":"2018-07-24T09:55:42","date_gmt":"2018-07-23T23:55:42","guid":{"rendered":"https:\/\/www.hiringlab.org\/au\/?p=10901"},"modified":"2022-08-13T02:56:54","modified_gmt":"2022-08-12T16:56:54","slug":"reality-check-for-the-australian-labour-market-key-trends-at-midyear","status":"publish","type":"post","link":"https:\/\/www.hiringlab.org\/au\/blog\/2018\/07\/24\/reality-check-for-the-australian-labour-market-key-trends-at-midyear\/","title":{"rendered":"Reality Check for the Australian Labour Market: Key Trends at Midyear"},"content":{"rendered":"\n<p><b>Key points:<\/b><\/p>\n\n\n\n<ol class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Employment growth in 2018 has eased considerably compared with last year, with full-time jobs accounting for less than one-third of the gain compared with 80% in 2017.<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Wage growth remains near record lows, with every state and industry underperforming. However, tax cuts and a boost to the minimum wage will give households some relief over the remainder of the year. <\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Manufacturing has accounted for almost 60% of employment growth <\/span><span style=\"font-weight: 400\">over the past six months<\/span><span style=\"font-weight: 400\">, bucking a long-term downward trend. <\/span><\/li><\/ol>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\" \/>\n\n\n\n<p><span style=\"font-weight: 400\">In 2018, employment growth has eased considerably, albeit still posting solid gains, while wage growth continued to disappoint. Employment has increased 20,600 people per month this year, almost 40% lower than the rate of job creation in 2017. What is more, the quality of jobs created has declined, with less than one-third full-time positions. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Amid softer employment growth, tepid wage growth is the predominant issue. It\u2019s been five years since Australia last experienced a sizable jump in wages and, despite policymakers best efforts, signs of improvement are few. Low wage growth has now emerged as a key issue in the next federal election, with the national government outlining an ambitious series of personal tax cuts in the 2018-19 budget. <\/span><\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><b>Labour market slack remains high<\/b><\/h5>\n\n\n\n<p><span style=\"font-weight: 400\">While employment growth has been solid in 2018, conditions have taken a clear backwards step following a remarkably strong run last year. In the first half of 2018, employment increased at an annualised pace of 2%, compared with 3.3% during 2017. The driving trend has been much softer growth in full-time positions. Expansion of &nbsp;part-time employment actually strengthened through the first half of 2018 compared with last year. Although the data can be volatile and some pullback was expected&#8211;Australia isn\u2019t big enough to sustain the full-time job growth that occurred last year&#8211;the shift has been swift and will be watched closely by policymakers. <\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"638\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Full-time-employment-growth-has-eased-during-2018-.png\" alt=\"\" class=\"wp-image-10907\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Full-time-employment-growth-has-eased-during-2018-.png 975w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Full-time-employment-growth-has-eased-during-2018--300x196.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Full-time-employment-growth-has-eased-during-2018--768x503.png 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption>Line graph titled &#8220;Full-time employment growth has eased during 2018.&#8221; With a vertical axis ranging from -6% to 9%, Indeed tracked the annual percentage change in Australian employment growth along a horizontal axis ranging from 2000 to 2018 with lines representing &#8220;full-time,&#8221; &#8220;part-time,&#8221; and &#8220;total.&#8221; In the first half of 2018, employment increased at an annualised pace of 2%, compared with 3.3% during 2017. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<p><span style=\"font-weight: 400\">Consistent with employment growth, the unemployment rate has eased to 5.4%. In isolation, a 5.4% unemployment rate sounds pretty good. Since 1990, the rate has been above its current level around three-quarters of the time. But the increasing prevalence of part-time work in Australia suggests that the unemployment rate is no longer the best indicator of labour market health. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Broader measures of unemployment, such as the underemployment and underutilisation rates, paint a very different picture. The underemployment rate, which measures people who are working but want more hours, sits at 8.5%. Meanwhile, the underutilisation rate, which includes both unemployed and underemployed people, remains stuck at almost 14%. To put these figures in perspective, the underemployment rate has been higher than its current level just 4.4% of the time since 1990. The underutilisation rate has been higher 42% of the time, pointing to considerable labour slack across the Australian economy. <\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"638\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044150\/Broader-measures-of-unemployment-are-elevated.png\" alt=\"\" class=\"wp-image-10905\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044150\/Broader-measures-of-unemployment-are-elevated.png 975w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044150\/Broader-measures-of-unemployment-are-elevated-300x196.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044150\/Broader-measures-of-unemployment-are-elevated-768x503.png 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption>Line graph titled &#8220;Broader measures of unemployment are elevated.&#8221; With a vertical axis ranging from 0% to 20%, Indeed tracked the percent change in Australian employment measures as a share of working age population along a horizontal axis ranging from 1990 to 2018 with lines representing &#8220;underemployment rate,&#8221; &#8220;underutilitisation rate,&#8221; and &#8220;unemployment rate.&#8221; In 2018, The underemployment rate was sitting at 8.5%. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\"><b>Manufacturing is driving employment growth<\/b><\/h5>\n\n\n\n<p><span style=\"font-weight: 400\">The news isn\u2019t all bad though. The number of job vacancies continues to rise&#8211;up 21% over the past year&#8211;which indicates the Australian business sector continues to create new opportunities. The number of unemployed people per job vacancy is now at its lowest level since the beginning of the global financial crisis.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">In an odd turn, manufacturing has become the leading source of employment growth. Manufacturing employment has accounted for almost 60% of employment gains over the past six months. The Australian Industry Group\u2019s manufacturing performance index has been in positive territory for the past 21 months, fueling demand for labourers and machinery operators. Over the past six months, those two occupations have accounted for almost half the rise in manufacturing employment. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Indeed job posting trends have tended to align themselves with these data. A variety of blue-collar occupations, including industry machinery mechanics and heavy equipment mechanics, have been among the fastest growing roles this year, with their share of total job postings up 79% and 55% respectively over the first half of <\/span><span style=\"font-weight: 400\">2018<\/span><span style=\"font-weight: 400\">. Boilermaker postings have increased their share by 50%. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">At the same time, many occupations have seen a sharp decline in the number of opportunities. Diagnostic medical sonographers, social workers and a range of other health professions have posted some of the biggest drops. &nbsp;Registered nurses have recorded a 29% decline in share of total job postings this year after finishing as the <\/span><a href=\"https:\/\/www.hiringlab.org\/au\/blog\/2018\/04\/24\/nursing-shortage-australia\/\"><span style=\"font-weight: 400\">top-ranked occupation for job postings<\/span><\/a><span style=\"font-weight: 400\"> last year. The sheer number of opportunities available last year suggested that demand for nurses might ease a little in the near term. Nevertheless, we believe this is a short-term phenomenon. Strong demand for healthcare services will continue to create opportunities for nurses across the country.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"2304\" height=\"884\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM.png\" alt=\"\" class=\"wp-image-10929\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM.png 2304w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM-300x115.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM-1024x393.png 1024w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM-768x295.png 768w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM-1536x589.png 1536w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.46.10-AM-2048x786.png 2048w\" sizes=\"auto, (max-width: 2304px) 100vw, 2304px\" \/><figcaption>table titled &#8220;Fastest growing and declining occupations in Australia.&#8221; Indeed listed occupations with the fasting growing and declining share of total job posting between January and June 2018 and January and June 2017. Medical assistant has the greatest increase with 133%. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\"><b>Wage growth continue to disappoint<\/b><\/h5>\n\n\n\n<p><span style=\"font-weight: 400\">Low wage growth has emerged as the key economic issue facing Australia. Over the past five years, wage growth has barely kept pace with inflation. If anything, wage conditions appear to have softened further in the first half of 2018. <\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"708\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044144\/Wage-growth-has-barely-kept-pace-with-inflation.png\" alt=\"\" class=\"wp-image-10936\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044144\/Wage-growth-has-barely-kept-pace-with-inflation.png 975w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044144\/Wage-growth-has-barely-kept-pace-with-inflation-300x218.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044144\/Wage-growth-has-barely-kept-pace-with-inflation-768x558.png 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption>Line chart titled &#8220;Wage growth has barely kept pace with inflation.&#8221; With a vertical axis ranging from 0% to 5%, Indeed tracked the annual percentage change of Australian wage growth and underlying inflation along a horizontal axis ranging from 2004 to 2018 with lines representing &#8220;wage price index&#8221; and &#8220;underlying inflation.&#8221; Over the past five years, wage growth has barely kept pace with inflation. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<p><span style=\"font-weight: 400\">Nevertheless, there is cause for optimism on wages. Some firms are reporting greater difficulty finding suitable staff, reflecting tighter conditions in some occupations. Australian employers are also well placed to pay their staff more. Corporate earnings have been growing strongly for the past 18 months. More recently, those gains have found their way to employees, albeit via a greater willingness to hire rather than boost wages. &nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"638\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Strong-corporate-earnings-has-supported-employment.png\" alt=\"\" class=\"wp-image-10908\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Strong-corporate-earnings-has-supported-employment.png 975w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Strong-corporate-earnings-has-supported-employment-300x196.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044149\/Strong-corporate-earnings-has-supported-employment-768x503.png 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption>Line chart titled &#8220;Strong corporate earnings has supported employment.&#8221; With a vertical axis ranging from -6% to 15%, Indeed tracked the annual percentage change in Australian company earnings and total wages paid along a horizontal axis ranging from 2004 to 2018 with lines representing &#8220;company earnings&#8221; and &#8220;total wages and salaries.&#8221; Corporate earnings have been growing strongly between the second half of 2016 and 2018. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<p><span style=\"font-weight: 400\">The latest job market developments offer low-income earners both good news and bad news. On July 1, the minimum wage rose &nbsp;3.5%, benefiting up to 2.3 million workers. Yet, on the same day, between 200,000 and 400,000 workers across the hospitality, retail trade and fast-food sectors had their penalty rates cut. That means some workers got a pay rise and pay cut in the same week. But, by virtue of reaching more people, the minimum wage increase should more than offset the effect of lower penalty rates, contributing to modest wage growth in the second half of the year.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">It\u2019s easy to understand why wage growth is causing so much concern. Feeble wage gains have persisted for over five years, and no state or industry has been spared. In the mining sector, wage growth is a full 54% below its average over the decade, while in retail trade and wholesale trade the declines are 42% and 41% respectively. Wage growth in healthcare, Australia\u2019s best-performing industry, is still 10% below its decade average. <\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"638\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044151\/Australian-wage-growth-is-below-its-10-year-average-in-every-industry.png\" alt=\"\" class=\"wp-image-10904\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044151\/Australian-wage-growth-is-below-its-10-year-average-in-every-industry.png 975w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044151\/Australian-wage-growth-is-below-its-10-year-average-in-every-industry-300x196.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044151\/Australian-wage-growth-is-below-its-10-year-average-in-every-industry-768x503.png 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption>Bar chart titled &#8220;Australian wage growth is below its 10-year average in every industry.&#8221; With a horizontal axis ranging from 0% to 4%, Indeed compared the annual percentage change of wage growth across various industries with bars representing &#8220;past year&#8221; and &#8220;decade average.&#8221; In the mining sector, wage growth is a full 54% below its average over the decade. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\"><b>Tax cuts for households<\/b><\/h5>\n\n\n\n<p><span style=\"font-weight: 400\">On May 8, the federal government announced a series of tax cuts that will flatten Australia\u2019s progressive income tax system, removing the second top tax bracket of 37%. The new tax regime will place everyone earning between $40,001 and $200,000 into the same marginal bracket, marking the most dramatic change in Australia\u2019s tax system since the introduction of the goods and services tax (GST) in 2000. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">The cuts, to be introduced in three phases over the next seven years, will primarily benefit lower- and middle-income earners initially. But later phases will overwhelmingly benefit higher-income earners. Examples are included in the table below. <\/span><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1054\" height=\"518\" src=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.47.18-AM.png\" alt=\"\" class=\"wp-image-10930\" srcset=\"https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.47.18-AM.png 1054w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.47.18-AM-300x147.png 300w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.47.18-AM-1024x503.png 1024w, https:\/\/d341ezm4iqaae0.cloudfront.net\/hiringlaborg\/sites\/6\/2018\/07\/03044145\/Screen-Shot-2018-07-23-at-9.47.18-AM-768x377.png 768w\" sizes=\"auto, (max-width: 1054px) 100vw, 1054px\" \/><figcaption>Table titled &#8220;Australian personal income tax cuts.&#8221; Indeed listed tax saved per financial year based on income in 2018-19, 2022-23, and 2024-25. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n<p><span style=\"font-weight: 400\">Wages are calculated pre-tax, so tax cuts don\u2019t affect them directly. But the cuts will increase a household\u2019s disposable income and purchasing power, allowing people to spend and save more than they otherwise could. Someone earning $30,000 a year effectively received a 0.7% pay raise beginning 1 July. By comparison, a person earning $150,000 a year gets little in 2018-19, but will collect a 2.3% bonus in the third phase starting 1 July 2024. &nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">The immediate impact of these tax cuts is expected to be small, largely because the phase one cuts are relatively modest. Still, by targeting lower- and middle-income earners, most recipients will spend rather than save their additional after-tax income. We anticipate these measures will support economic growth in the near term, creating a small number of new jobs, which may lead to modest employment growth gains in the second half of 2018. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Nevertheless, with labour market slack still elevated, these measures are unlikely to contribute materially to near-term wage growth. Unfortunately, workers across the country can expect feeble income growth to continue. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Employment growth in Australia has eased in 2018, reflecting modest gains in full-time jobs. Wage growth continues to disappoint. However, tax cuts and a boost to the minimum wage could provide some much-needed relief to Australian households. <\/p>\n","protected":false},"author":41,"featured_media":10933,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"recruiter-hub-blocks.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"post_mwm_category":[224],"post_topic":[],"post_content_type":[],"post_duration":[],"post_actions":[],"post_franchise":[],"post_mwm_author":[182],"class_list":["post-10901","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","post_mwm_category-state-of-the-labour-market","post_mwm_author-cpickering"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Reality Check for the Australian Labour Market: Key Trends at Midyear - Indeed Hiring Lab Australia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hiringlab.org\/au\/blog\/2018\/07\/24\/reality-check-for-the-australian-labour-market-key-trends-at-midyear\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reality Check for the Australian Labour Market: Key Trends at Midyear - Indeed Hiring Lab Australia\" \/>\n<meta property=\"og:description\" content=\"Employment growth in Australia has eased in 2018, reflecting modest gains in full-time jobs. Wage growth continues to disappoint. 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