Part 1 Labour Market Update

Part 1 Labour Market Update Ellie Yates Fri, 12/04/2020 - 10:41

1.1 Impact of COVID-19 on the Australian labour market 

  • Employment and unemployment
  • Hours worked
  • Underemployment

1.2 Demographic impacts

  • Youth
  • Gender impact

1.3 State and territory impact

1.4 Industry employment through 2020
1.5 The Internet Vacancy Index 

  • Key trends
  • State and territory job advertisement differences
  • Regional and capital city job advertisement trends

1.6 Outlook

1.1 Impact of COVID-19 on the Australian labour market

1.1 Impact of COVID-19 on the Australian labour market Ellie Yates Fri, 12/04/2020 - 10:42

Employment and unemployment

While COVID-19 has had a significant negative impact on the Australian labour market, there are now definitive signs of improvement.

Against the backdrop of the shutdown of non-essential services and trading restrictions, employment initially contracted sharply – by 871,600 (or 6.7%) between March 2020 (when Australia recorded its 100th COVID-19 case) and the trough in the labour market in May 2020.

Part-time employment accounted for 61.2% of the decline in employment between March and May, falling by 533,700 (or 12.9%), while full-time employment decreased by 337,900 (or 3.8%) over the period.

However, reflecting the significant decline in coronavirus cases and the subsequent easing in restrictions, employment has rebounded strongly, by 648,500 (or 5.3%) since May, to stand at 12,773,900 in October 2020, although it remains 223,100 (or 1.7%) below the level recorded in March.

Encouragingly, employment surged by 178,800 in October, with Victoria accounting for almost half (81,600) of the increase, as COVID-19 was brought under control and restrictions in the state began to ease.

Since May, part-time employment has recovered strongly (up by 538,200 or 15.0%) and is now 4,600 (or 0.1%) above the level recorded in March 2020. Over the same period, full-time employment rose by a more modest 110,200 (or 1.3%) but remains 227,700 (or 2.6%) below the level recorded in March 2020. It is worth noting that full-time employment rose by 97,000 (or 1.1%) in October, the largest monthly increase on record.

While trading restrictions, as well as school closures, had a negative impact on employment, they also resulted in 665,100 people leaving the labour force between March and May, pushing the participation rate down by 3.3 percentage points, to 62.7% in May 2020. So, while the unemployment rate rose from 5.2% in March 2020, to 7.1% in May 2020, the significant decline in employment did not translate into a similar increase in unemployment, due to the large number of people who left the labour force over the period.

Table 1: Labour market indicators, October 2020

  October Change between March and May 2020 Change between May and October 2020 Change between March and October 2020
    (‘000) (%) (‘000) (%) (‘000) (%)
Employment (‘000) 12,773.9 -871.6 -6.7 648.5 5.3 -223.1 -1.7
Full-time employment (‘000) 8,643.7 -337.9 -3.8 110.2 1.3 -227.7 -2.6
Part-time employment (‘000) 4,130.2 -533.7 12.9 538.2 15.0 4.6 0.1
Unemployment (‘000) 960.9 206.5 28.9 38.5 4.2 245.1 34.2
Unemployment rate (%) 7.0 - 1.8 pts - -0.1pts - 1.8 pts
Participation rate (%) 65.8 - -3.3 pts - 3.2 pts - -0.1 pts
Underemployment rate (%) 10.4 - 4.3 pts - -2.7 pts - 1.6 pts

Source: ABS, Labour Force, Australia, October 2020 seasonally adjusted data.

Note that changes in the table are calculated from more detailed data and may not match changes calculated manually from the figures

Since May the labour force has risen by 687,000, which has pushed the participation rate up by 3.2 percentage points (to 65.8% in October), with fewer COVID-19 cases and eased restrictions lifting confidence and encouraging people to enter the labour force in search of work. The increase in labour force participation, together with only a partial recovery in employment, means the unemployment rate has fallen by just 0.1 percentage point since May, to 7.0% in October 2020.

In summary, while labour market conditions in Australia have improved significantly since May 2020, most key labour market indicators have not returned to their pre-COVID-19 levels. In particular, employment remains 223,100 (or 1.7%) below the level recorded in March 2020, with full-time employment 227,700 (or 2.6%) lower over the period, while the unemployment rate remains 1.8 percentage points above the 5.2% recorded in March. Moreover, 960,900 Australians remain unemployed, 245,100 (or 34.2%) more than there were prior to the onset of the pandemic in March.

Hours Worked

Given that businesses often reduce the hours of their workers as an early response to a labour market shock, it is not surprising that the number of monthly hours worked in all jobs declined significantly, by 185.5 million hours (or 10.4%) between March and May 2020 (see Figure 2).

As COVID-19 cases have abated and restrictions eased, however, monthly hours worked have recovered somewhat, increasing by 117.6 million hours (or 7.4%) between May and October 2020 to 1,711.0 million hours. However, monthly hours worked remain 3.8% below the pre-COVID-19 level. The number of people who worked zero hours due to economic reasons (defined as people who were either stood down, had insufficient work or no work available) rose from 76,500 in March 2020, to a peak of 766,900 in April 2020, but has since declined to 133,800 in October 2020.

Underemployment

In line with the significant reduction in hours worked, the level of underemployment increased by 500,400 (or 41.4%) between March and May. Since May, however, underemployment has fallen by 283,100 (or 16.6%), to 1,424,800 in October, although it remains well above the 1,207,500 recorded in March.

Similarly, the underemployment rate increased significantly at the onset of COVID-19, rising from 8.8% in March to a record high of 13.8% in April. While the underemployment rate has since declined to 10.4% in October, it is still 1.6 percentage points above the rate recorded in March.

The increase in underemployment between March and October was entirely due to an increase in the number of underemployed full-time workers who worked part-time hours for economic reasons1 (up by 177,900, or 160.5%, to 288,700). The number of underemployed part-time workers actually contracted by 2,900 (or 0.3%) over the period, to 1,067,800 in October.

Reflecting the impact of COVID-19 on hours worked, the share of total underemployment accounted for by underemployed full‑time workers rose from 9.4% in March, to a peak of 42.9% in May, before declining to 21.3% in October.

Prior to April, underemployed part-time workers had routinely comprised at least 90% of total underemployment each month since monthly underemployment data became available in July 2014.

1 Henceforth referred to as ‘underemployed full-time workers’.

1.2 Demographic impacts

1.2 Demographic impacts Ellie Yates Fri, 12/04/2020 - 10:43

Youth

Young people are particularly vulnerable during large economic and labour market shocks, as they tend to have fewer skills and less experience than their prime-age counterparts. They are often the first to be retrenched and may face particular challenges regaining employment, like those who have never worked before, as they are often competing with more highly skilled job seekers.

While all cohorts were negatively affected by the pandemic, the youth cohort (persons aged 15–24) has been particularly hard‑hit, as this age group is overrepresented in industries that have been most severely affected by the impact of COVID-19.

Youth employment contracted sharply in the initial months of the pandemic, declining by 333,200 (or 17.1%) between March and May. Since then, however, youth employment has recovered somewhat, rising by 226,600 (or 14.1%), to 1,838,900 in October, although it is still 106,700 (or 5.5%) below the level recorded in March.

Youth have accounted for around 48% of the total decline in employment between March and October, despite comprising just 15% of the civilian population.

The decrease in youth employment between March and October has been due, in large part, to a fall of 70,400 (or 8.3%) in youth full-time employment, while part-time employment has declined by 37,700 (or 3.4%) over the period.

Along with the contraction in youth employment, the youth unemployment rate has increased from 11.6% in March 2020, to 15.6% in October. However, it remains below the recent peak of 16.4% recorded in June. This equates to an additional 81,900 young people becoming unemployed since March.

Figure 5: Youth unemployment rate and annual youth full-time employment growth, October 2008 to October 2020

 

Image
The decrease in youth employment between March and October has been due, in large part, to a fall of 70,400 (or 8.3%) in youth full-time employment, while part-time employment has declined by 37,700 (or 3.4%) over the period. Along with the contraction in youth employment, the youth unemployment rate has increased from 11.6% in March 2020, to 15.6% in October. However, it remains below the recent peak of 16.4% recorded in June. This equates to an additional 81,900 young people becoming unemployed since Marc

Source: ABS, Labour Force, Australia, October 2020, seasonally adjusted data.

Youth have also recorded the largest fall (in percentage terms) in actual hours worked of all age cohorts between March and October, declining by 11.3% over the period, compared with a fall of 7.3% for those aged 25–34, 5.9% for those aged 35–44, 7.9% for those aged 45–54, and 2.4% for those aged 55 and over.

Reflecting the decline in hours worked for young people, the youth underemployment rate also increased, from 19.1% in March, to a record high of 23.6% in April 2020, before declining to 17.9% in October. By comparison, the underemployment rate for all persons stood at 10.4% in October.

Gender impact

Employment trends by gender are now more mixed than they were in the initial months of the pandemic when women were particularly hard hit (see Table 2). This reflects, in large part, their overrepresentation in industries that were most severely affected by COVID-19, such as Accommodation and Food Services, and the fact that they were more likely to be employed on a casual basis, where job losses have been greater. Indeed, female employment fell sharply, by 470,500 (or 7.7%) between March and May, although male employment also decreased considerably, by 401,100 (or 5.9%).

Since then, female employment has recovered somewhat, increasing by 343,800 (or 6.1%) to 6,022,800 in October. Male employment also rose between May and October, by 304,600 (or 4.7%), to 6,751,100.

The significant increase of 118,800 in male employment in October alone has accounted for almost 40% of the rise in employment for men in the last 5 months.

While females comprised 47.1% of total employment in October, they accounted for 56.8% of the decrease in employment since March.

Full-time employment for women fell by 116,900 (or 3.5%) between March and October, while part-time employment decreased by 9,800 (or 0.3%). Over the same period, full-time employment for men declined by 110,800 (or 2.0%), while part-time employment increased by 14,300 (or 1.1%).

Table 2: Key labour market indicators by gender, October 2020

  October Change between March and October 2020 Change between March and May 2020 Change between May and October 2020
    (%) (‘000) (‘000) (%) (‘000) (%)
Female
Employment (‘000) 6022.8 -126.7 -2.1 -470.5 -7.7 343.8 6.1
Unemployment (‘000) 455.0 122.2 36.7 90.3 27.1 31.9 7.5
Unemployment rate (%) 7.0 - 1.9 pts - 1.8 pts - 0.1 pts
Participation rate (%) 61.0 - -0.2 pts - -3.6 pts - 3.4 pts
Underemployment (‘000) 761.2 72.6 10.5 170.7 24.8 -98.1 -11.4
Underemployment rate (%) 11.8 - 1.1 pts - 3.5 pts - -2.3 pts
Male              
Employment (‘000) 6751.1 -96.4 -1.4 -401.1 -5.9 304.6 4.7
Unemployment (‘000) 505.9 122.9 32.1 116.2 30.3 6.7 1.3
Unemployment rate (%) 7.0 - 1.7 pts - 1.9 pts - -0.2 pts
Participation rate (%) 70.8 - 0.0 pts - -2.9 pts - 2.9 pts
Underemployment (‘000) 663.6 144.7 27.9 329.6 63.5 -185.0 -21.8
Underemployment rate (%) 9.1 - 2.0 pts - 5.0 pts - -3.1 pts

Source: ABS, Labour Force, Australia, October 2020, seasonally adjusted data.

Note that changes in the table are calculated from more detailed data and may not match changes calculated manually from the figures.

Between March and May, 380,200 women left the labour force, pushing the female participation rate down by 3.6 percentage points, to 57.5% in May 2020, the lowest rate recorded since October 2006.

In line with the easing of restrictions, however, 375,700 women have re-entered the labour force since May, with the female participation rate increasing by 3.4 percentage points, to 61.0% in October, marginally below the 61.2% recorded in March, prior to the pandemic.

The initial decline in the labour force for men was slightly less stark, with 284,800 males leaving the labour force between March and May, resulting in a 2.9 percentage point decline in their participation rate, to 68.0%, the lowest rate on record. Since May, however, the male labour force has increased by 311,300, with the male participation rate rising by 2.9 percentage points to 70.8% in October, equal to the rate recorded in March.

Over the entire COVID-19 period (March to October), and reflecting movements in employment and changes in the participation rate, the female unemployment rate has risen by 1.9 percentage points, to 7.0% in October, while the male unemployment rate has increased by 1.7 percentage points to also stand at 7.0%.

Figure 6: Unemployment rate and participation rate by gender, October 2018 to October 2020

Image
This graph illustrates that women recorded a particularly large fall in hours worked between March and April, down by 12.0% (or 88.5 million hours), compared with a decline of 7.7% (or 80.5 million hours) for men.   Since April, hours worked for women have increased by 9.0% (or 58.5 million hours), compared with a rise of 4.4% (or 42.6 million hours) for men.   However, hours worked for women in October, remain 4.1% (or 30.0 million hours) lower than the level recorded in March, while hours worked for men a

Source: ABS, Labour Force, Australia, October 2020, seasonally adjusted data.

Women recorded a particularly large fall in hours worked between March and April, down by 12.0% (or 88.5 million hours), compared with a decline of 7.7% (or 80.5 million hours) for men.

Since April, hours worked for women have increased by 9.0% (or 58.5 million hours), compared with a rise of 4.4% (or 42.6 million hours) for men.

However, hours worked for women in October, remain 4.1% (or 30.0 million hours) lower than the level recorded in March, while hours worked for men are 3.6% (or 37.9 million hours) lower than in March.

There was a large increase in the number of men and women who worked fewer hours than usual (or no hours at all) for economic reasons (that is, there was no work, not enough work available or they were stood down) in the initial months of the pandemic. Indeed, between March and April, the number of women working fewer hours than usual (or no hours at all) for economic reasons increased by 687,400 (or 344.2%) to a record high of 887,100, compared with a rise of 627,500 (or 235.1%) for men, to 894,400, also a record high (see Figure 7).

Since April, however, there has been a greater decline in the number of women who worked fewer than their usual hours (or no hours at all) for economic reasons, down by 616,400 (or 69.5%) to 270,700 in October, compared with a fall of 490,900 (or 54.9%) for men, to 403,500.

Reflecting the significant decline in hours worked in the initial months of COVID-19, female underemployment increased by 243,400 (or 35.3%) between March and April, to a record high of 932,000, while male underemployment increased by 369,800 (or 71.3%), to 888,800, also a record high.

Since April, female underemployment has fallen by 170,800 (or 18.3%), to 761,200 in October. Male underemployment also declined between April and October, by 225,200 (or 25.3%), to 663,600.

Similarly, the underemployment rate for both women and men surged in the initial stages of the pandemic, to record highs of 15.0% and 12.6% respectively, in April.

Since April, however, the female underemployment rate has fallen to 11.8% in October 2020. The male underemployment rate also declined between April and October, to 9.1%.

The female underemployment rate has consistently tracked higher than the male underemployment rate. Since the onset of COVID-19, however, the gap between the male and female rates has narrowed, due to the significant decline in male full-time employment that occurred between March and September (as males accounted for around two-thirds of the decline in full-time employment over the period).

Full-time employment for males rebounded strongly in October, although it is too early to discern whether this trend will continue and the implications this may have for the size of the underemployment rate gap, going forward.

Figure 8: Underemployment rate by gender, October 2015 to October 2020

Image
This graph illustrates that the underemployment rate for both women and men surged in the initial stages of the pandemic, to record highs of 15.0% and 12.6% respectively, in April.   Since April, however, the female underemployment rate has fallen to 11.8% in October 2020. The male underemployment rate also declined between April and October, to 9.1%.   The female underemployment rate has consistently tracked higher than the male underemployment rate. Since the onset of COVID-19, however, the gap between th

Source: ABS, Labour Force, Australia, October 2020, seasonally adjusted data.

1.3 State and territory impact

1.3 State and territory impact Ellie Yates Fri, 12/04/2020 - 10:44

The impact of the COVID-19 pandemic on the Australian labour market at the national level has also been evident across the states and territories. Since March, employment has fallen in the majority of jurisdictions, while the unemployment rate has risen in all states and territories.

Some jurisdictions have been more severely affected than others due to a range of factors, including ongoing COVID-19 cases, each jurisdiction’s industry composition, its demographics (population size and age structure) and differences in the way each state and territory has managed the pandemic.

Not surprisingly, reflecting the outbreak of COVID-19 cases in Victoria from late June and the subsequent restrictions, labour market indicators in Victoria remain well below pre-COVID-19 levels and are currently faring more poorly than in other states. For instance, employment in Victoria remains 141,100 below the level recorded in March, while the unemployment rate has risen to 7.4% in October, well above the 5.2% recorded in March.

Encouragingly, employment in Victoria rose by 81,600 in October, the largest monthly increase on record, as restrictions in the state began to ease. Moreover, it is likely that labour market conditions in Victoria will continue to strengthen following a further relaxation of restrictions in November.

Figure 9: Change in employment between March 2020 and October 2020, by state and territory

Image
This graphic illustrates that some states have been more severely affected than others due to a range of factors, including ongoing COVID-19 cases, each jurisdiction’s industry composition, its demographics (population size and age structure) and differences in the way each state and territory has managed the pandemic.  Not surprisingly, reflecting the outbreak of COVID-19 cases in Victoria from late June and the subsequent restrictions, labour market indicators in Victoria remain well below pre-COVID level

Source: ABS, Labour Force, Australia, October 2020, seasonally adjusted data.

On the other hand, labour market conditions in Western Australia (where there has been no community transmission since 11 April) have rebounded strongly since the trough in May. Employment in that state has increased by 89,300 (or 7.0%) over the period, after declining by 95,400 (or 7.0%) between March and May.

Against this stronger backdrop, Western Australia’s unemployment rate has fallen by 1.5 percentage points since May, to stand at 6.6% in October. This is the second lowest unemployment rate of any state, although still well above the 5.4% recorded in March.

1.4 Industry employment through 2020

1.4 Industry employment through 2020 Ellie Yates Fri, 12/04/2020 - 10:45

The pandemic had a significant impact on employment across all industries between February and August 2020 (latest available data).

The Accommodation and Food Services industry recorded the largest fall in employment over the period (down by 164,700 or 17.6%). Employment in the Manufacturing industry also remains well below the pre-pandemic level (down by 59,600 or 6.5%), followed by Professional Scientific and Technical Services (down by 53,100 or 4.5%), Other Services (49,700 or 10.2%) and Administrative and Support Services (down by 49,700 or 10.2%).

Positively, employment is now higher than pre-pandemic levels in 7 industries. The Public Administration and Safety industry has recorded the largest increase in employment over the 6 months to August 2020 (up by 60,300 or 7.3%), followed by Agriculture, Forestry and Fishing (up by 38,200 or 11.8%) and Financial and Insurance Services (up by 22,300 or 4.8%), Electricity, Gas, Water and Waste Services (up by 18,300 or 13.8%), Rental Hiring and Real Estate Services (up by 8300 or 3.8%), Mining (up by 6,000 or 2.5%) and Wholesale Trade (up by 4,600 or 1.2%).

These changes over the 6 months to August mask the significant variation in employment dynamics in the two quarters. Between February and May, employment fell in 13 of the 19 industries. Employment has since recovered strongly, increasing in 17 of the 19 industries over the quarter to August.

Accommodation and Food Services was the industry most exposed to COVID-19 related restrictions, and recorded the largest fall in employment over the quarter to May (down by 294,200 or 31.4%). Over the August quarter, however, as restrictions began to ease, this industry recorded the largest increase in employment, of 129,500. Similarly, the Education and Training industry recorded the second largest fall in employment over the initial period (down by 91,500 or 8.1%) and also saw a partial rebound over the 3 months to August. The Arts and Recreation Services, Retail Trade and Health Care and Social Assistance industries also all recorded large falls in employment over the May quarter but, importantly, have all seen a bounce back in employment over
the quarter to August.

Despite the pandemic’s significant impact on the labour market, 5 industries (Agriculture, Forestry and Fishing; Wholesale Trade; Financial and Insurance Services; Rental, Hiring and Real Estate Services; and Public Administration and Safety) recorded increases in employment in both quarters. Construction is the only industry in which employment fell in both the May and August quarters.

1.5 The Internet Vacancy Index

1.5 The Internet Vacancy Index Ellie Yates Fri, 12/04/2020 - 10:45

The NSC’s monthly Internet Vacancy Index (IVI) is the only data source that provides a consistent monthly time series of online job advertisements at detailed levels of occupations and regions in Australia. The IVI is based on a count of online job advertisements newly lodged on SEEK, CareerOne and Australian JobSearch during the month. The IVI does not reflect the total number of job advertisements in the labour market as it does not include jobs advertised through other online job boards, employer websites, or in newspapers. Nor does it take account of vacancies filled using informal methods such as word of mouth.

Key trends

Nationally, online recruitment activity fell sharply in early 2020, as a result of rising COVID-19 cases and the subsequent shutdown of non-essential services and the imposition of trading restrictions. The IVI reached a series low point of newly advertised jobs in April, declining by 56.0% (or 91,100 job advertisements) in the 2 months from its pre-pandemic level2.

Since then, there has been steady recovery in recruitment activity. The number of newly advertised jobs has now increased for 6 consecutive months and has more than doubled from the April series low point (up by 83,300 job advertisements). In October (the latest available data at the time of writing), job advertisements increased by 6.2% (or 9,100 job advertisements).

The level of job advertisements now stands at 95.2% of pre-pandemic levels (down by 7,800 job advertisements). Over the year to October, recruitment activity has only fallen by 2.3% (or 3,600 job advertisements).

State and territory job advertisement differences

Since the onset of the pandemic, there have been some notable differences in recruitment activity at the state/territory level. This is mainly due to the significant variation in COVID-19 case numbers in each jurisdiction and the subsequent restrictions to limit the spread of cases.

After an initial period of recovery, consistent with the other states/territories, Victoria’s second wave of COVID-19 and subsequent economic restrictions saw job advertisements again decline between June and August. However, recruitment activity proved more resilient during Victoria’s second shutdown, declining to a low point of 25,700 job advertisements in August, compared with the low of 15,700 job advertisements in April. Further, in line with other jurisdictions, the lifting of COVID-19 restrictions has seen recruitment activity in Victoria begin to recover, with October representing the second consecutive month of increasing job advertisements in the state.

While the pace of recovery differs between jurisdictions, all are now on the path to fully recovering to pre-COVID-19 levels. Recruitment activity during October increased across all states and the Australian Capital Territory, and remained steady in the Northern Territory. Victoria had the strongest increase (up by 10.2% or 3,100 job advertisements), followed by Tasmania (up by 7.5% or 130 job advertisements), Queensland (up by 6.5% or 1,900 job advertisements), the Australian Capital Territory (up by 5.2% or 260 job advertisements) and New South Wales (up by 5.1% or 2,500 job advertisements).

Importantly, job advertisements in October exceeded pre-pandemic levels in Tasmania, Western Australia, South Australia, Queensland and the Northern Territory, although this level of labour demand will need to remain elevated for some time to see employment return to its pre-COVID-19 level.

Regional and capital city job advertisement trends

Pronounced differences have also been apparent at the regional level.

For instance, in 3-month average of original data terms, 5 of the 8 capital city regions recorded declines in recruitment activity over the year to October.

Overall, capital city regions recorded an average fall in job advertisements of 20.0% (or 27,800 job advertisements) over the year to October. By comparison, job advertisements in regional areas increased by an average of 17.6% (job advertisements) over the same period.

Despite these falls, recruitment activity is recovering in capital city regions. Overall, capital city regions have experienced continuous month-on-month growth in job advertisements since June, with job advertisements increasing 74.6% from the series low point.

2 Pre-pandemic levels are defined as unrevised February 2020 trend job advertisements levels (that is, the February 2020 trend job advertisement level as published in the February 2020 release of the IVI).

1.6 Outlook

1.6 Outlook Ellie Yates Fri, 12/04/2020 - 10:45

Labour market data were stronger than expected in October and the easing of restrictions has lifted spirits, as well as consumer and business confidence. Recent positive news around the apparent effectiveness of COVID-19 vaccines has also boosted confidence, although production and distribution challenges, as well as the ultimate uptake rate of the vaccines, may pose some downside risk to the outlook.

Nevertheless, there is considerable stimulus in the system, as well as incentives for firms to employ and invest. That said, considerable uncertainty continues to surround the labour market outlook. The 2020-21 Budget forecast the unemployment rate to peak at 8.0% in the December quarter 2020, before declining to 7.25% in the June quarter 2021 and to 6.5% in the June quarter 2022.

A legacy of this pandemic, however, may be an extended period of unemployment (and indeed long-term unemployment) beyond this horizon that is substantially higher than pre-COVID-19 levels.