Labour market hard hit by COVID-19, but starting to recover
The COVID-19 pandemic has radically affected the Australian labour market. Employment fell sharply, by 871,600 (or 6.7%) between March (when Australia recorded it’s 100th case of COVID-19) and May.
Against the backdrop of declining COVID-19 cases and easing restrictions, however, employment has rebounded strongly, increasing by 648,500 (or 5.3%) between May and October, although it remains 223,100 (or 1.7%) below the level recorded in March. Youth have accounted for almost half of the total decline in employment since March.
Reflecting the unprecedented hit to the labour market from the pandemic, the unemployment rate has drifted much higher, from 5.2% in March, to 7.0% in October (or an additional 245,100) while the youth unemployment rate has risen from 11.6%, to 15.6% over the period. Hours worked remain 3.8% lower than in March, while underemployment is now 217,300 above its pre‑COVID-19 level.
Nationally, online job advertisements fell sharply in early 2020, with the Internet Vacancy Index hitting a series low in April 2020. Since then, there has been a steady recovery with the number of newly advertised jobs increasing.
There are notable differences in recruitment activity across jurisdictions, due mainly to the variation in COVID-19 case numbers and related restrictions. Importantly, all are now on the path to recovering to pre-COVID-19 levels. Pronounced differences have also been apparent at the regional level, with online job advertisements falling more sharply in the capital cities than in regional areas. Overall, however, both have experienced growth over the past few months.
Occupational trends show that demand for workers is increasing. Overall, job advertisements increased for 41 of the 48 detailed occupational groups in October, while job advertisements now exceed pre-COVID levels for 23 of the 48 occupations.
Insights about resilient occupations
Insights into future job opportunities are vital to support Australia’s economic recovery from the impacts of COVID-19. To help support policy responses, such as the Australian Government’s JobTrainer initiative, and to assess broader impacts on occupations as a result of COVID-19, the NSC has developed an occupational resilience framework that ranks the relative strength of 358 occupations and their likely prospects as the economy recovers from the initial impact of the pandemic. More than half of the employment in the top third of resilient occupations are in three industries: Health Care and Social Assistance; Construction; and Education and Training.
There are also indications that some occupations hard hit in the early stages of the pandemic are starting to see signs of recovery. Around one-third of the 358 occupations recorded an increase in employment in the August quarter 2020 after experiencing a decline in the May quarter 2020. However, more than half (56.6%) of these occupations still recorded an overall decline in employment in the 6 months to August 2020, outlining that, for many of the rebounding occupations, further employment growth is required to reach pre-COVID-19 levels of employment.
Looking forward with scenario modelling
Scenario modelling is important when labour market conditions involve considerable uncertainty. It improves understanding of plausible possibilities and enables comparison of the impact on labour market outcomes in the short- and medium-term.
The NSC partnered with the Centre of Policy Studies (Victoria University) and AlphaBeta Advisors to model four economic scenarios using a computable general equilibrium model of the Australian economy, as well as a ‘no COVID-19 base’ scenario benchmark.
The central scenario, Economic Restoration, suggests that with social distancing measures wound back and borders re-opening, domestic and international activity resumes, similar to pre COVID-19 levels and patterns. Under this scenario the impacts of COVID-19 are stark in the short-term, but many occupations will recover over time.
The other three scenarios are Fortress Australia, which assumes borders remain closed until 2022; Impeded Recovery where busines confidence is dampened; and Accelerated Digitisation which sees widespread adoption of digital technologies and processes.
The significant decline in COVID-19 cases and restrictions saw employment rebound strongly (by 5.3%) from May to October. In addition, while the unemployment rate has fallen slightly since May, it remains higher than it was in March, at 7.0% in October.