It is well known that Australia currently has the tightest labour markets in a generation. As the economy quickly bounced back from the COVID shutdowns of early 2020, robust job creation soon followed. But with Australia’s international borders closed for two years, the economy was cut off from a key source new workers – net overseas migration.
With demand surging while supply was suddenly cut, it was inevitable that labour markets would become very tight.
The unemployment rate in Australia sits at 3.7% in January 2023. While a marginal increase over December (3.5%), it is still is well below normal level. Even during the height of the mining boom in 2008, unemployment never fell below 4.0%. The Reserve Bank of Australia estimates that “full employment” should be somewhere between 4-5%.
For businesses, the unfortunate corollary of tight labour markets is great difficulty in filling jobs.
In the year to September 2022, the Australian economy added 929,00 new jobs. But with reduced supply of unemployed workers to draw on, many newly-created jobs simply couldn’t be filled at all. A huge increase in vacancies across the economy resulted.
The most recent labour market statistics lay bare the extent of the job vacancies crisis facing Australia. In the September quarter of 2022:
These elevated vacancy rates impose real costs on the Australian economy. They represent lost economic opportunities – vacant jobs mean demand is not being met – and reduce continuity for services to the community. They contribute to supply chain disruptions and inflation, which is presently at record levels. They also exacerbate pre-existing skills shortages, preventing business growth and industry development.
The vacancies crisis is now even affecting business planning and decision-making.
In the latest Ai Group CEO Survey, business leaders told us they changed their investment plans for the 2023 due to chronic staff shortages. This has involved raising wages & benefits, increasing overall staffing numbers, outsourcing production and in some cases reducing their product offerings.
Business leaders need to take the vacancies challenge into consideration when formulating strategy for the coming year. And to do this effectively, you need to know how vacancies are affecting your industry and market.
To help better inform businesses, the Ai Group Research and Economic team has developed an Australian job vacancies data explorer (see below).
It is an interactive data tool, which allows you to explore job vacancies in different sectors and states of the economy. Users can select a combination of states (or national) and sectors to quickly see the average vacancy rates for your business’s market over the last decade. You can use it to compare your market to other sectors, other states, and track how vacancy pressures have evolved over time.
Dr Jeffrey Wilson is Ai Group's Director of Research and Economics. He leads our economics team, and provides strategic direction in developing the research program to support our advocacy, service delivery and policy activities. He specialises in international economic policy, with a focus on how trade and investment shape the Australian business environment.
