Australian Jobs 2021
Response to COVID-19
The impact of COVID-19 on the labour market
The COVID-19 pandemic initially had a significant, negative impact on the Australian labour market, with employment falling much more quickly and dramatically than in previous recessions. Between March 2020 (when Australia recorded its 100th COVID-19 case) and the trough in the labour market in May 2020, the number of people employed in Australia fell by 856,900 (or 6.6%). Many businesses also reduced the hours of their workers as an early response to the pandemic, with monthly hours worked falling by 157.2 million hours (or 8.9%) between March and May 2020.
The shutdown of non-essential services, closure of schools and introduction of trading restrictions initially had a particularly large impact on employment in service industries, such as Accommodation and Food Services, Education and Training and Arts and Recreation Services. Reflecting the composition of employment in these industries, among other factors, part-time employment decreased by 535,600 (or 13.0%), between March and May 2020, while full-time employment declined by 321,300 (or 3.6%). Women, who tend to be concentrated in the above industries, were also disproportionately affected, with employment falling sharply, by 476,400 (or 7.7%), compared with a somewhat less pronounced fall of 380,500 (or 5.6%) recorded for males.
Rising COVID-19 cases and associated restrictions during this period also resulted in 663,900 people leaving the labour force between March and May 2020, pushing the participation rate down, from 65.9% in March 2020, to 62.6% in May 2020. The decrease in the participation rate was stronger for females (down by 3.7 percentage points) than males (down by 2.7 percentage points), reflecting the greater tendency of women to take on caring roles during school and childcare closures.
The unemployment rate rose from 5.3% in March 2020, to 7.0% in May 2020, significantly above the peak recorded after the Global Financial Crisis, although it would have drifted much higher if it weren’t for the large fall in labour force participation and the introduction of JobKeeper.
While the decline in employment following the onset of COVID-19 was sharp, the labour market subsequently rebounded quickly, as a result of the significant decline in coronavirus cases and an associated easing of restrictions in most jurisdictions, at the time.
Change in employment since start of downturn (%)
Labour market conditions for youth
Youth (persons aged 15 to 24 years) were particularly hard-hit by the pandemic, as they are overrepresented in the service industries that were most severely affected by the initial impact of COVID-19. In addition, young people are particularly vulnerable during economic downturns, as they tend to have fewer skills and less experience than their older counterparts and are often the first to be retrenched by employers in times of economic difficulty.
Between March and May 2020, employment for youth decreased by 329,100 (or 17.0%), accounting for 38.4% of the total contraction in overall employment over the period, despite the cohort comprising just 14.9% of overall employment in March 2020. Against this weaker backdrop, the youth unemployment rate rose sharply, from 11.6% in March 2020, to a peak of 16.4% in July 2020. The rise in the unemployment rate occurred in conjunction with a decrease in the youth participation rate, from 68.2% in March 2020, to a low of 59.7% in May 2020.
In line with the strengthening in overall labour market conditions since May 2020, the youth labour market has also improved. Youth employment rose by 314,200 (or 19.6%) between May 2020 and July 2021, exceeding the growth rate (in percentage terms) of 8.4% recorded in overall employment. Despite this strong rise, youth employment remained 14,900 (or 0.8%) below the level recorded in March 2020. It is important to note, however, that this occurred in conjunction with a substantial fall in the youth population (of 131,800 since March 2020), following the closure of international borders.