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Australia's unemployment has fallen back to its lowest point since 1974, but some experts question whether it can stay there much longer as borders reopen and employers regain access to a global labour pool.
Key points:
- The unemployment rate fell back from 3.5 to 3.4 per cent, the lowest level since the mid-1970s
- Around 32,000 jobs were added to Australia's economy in October
- Fewer workers took time off work for illness in October than over previous months in 2022
Official estimates from the Australian Bureau of Statistics put Australia's unemployment rate at 3.4 per cent, down from 3.5 per cent for the past couple of months and equal to a low set in July this year.
About 32,000 jobs were added to the economy in October, with strong gains in full-time work offsetting a small decline in part-time jobs.
Underemployment is also the lowest it has been since just before the global financial crisis, in August 2008, at 5.9 per cent.
Combining the unemployed with the underemployed, the under-utilisation rate fell to 9.3 per cent, its lowest level since March 1982.
"There are now around 236,000 fewer unemployed people and 365,000 fewer underemployed people than in March 2020," ABS head of labour statistics Bjorn Jarvis said.
The proportion of Australians in work or looking for it has remained steady, with the low unemployment figures meaning there are close to record levels of people in jobs.
'Demand for workers hasn't deteriorated'
Callam Pickering, an Asia-Pacific economist at jobs website Indeed, said the data showed the Reserve Bank probably had more work to do lifting interest rates to cool the economy and prevent wages chasing inflation higher.
"This jobs report confirms that the demand for workers hasn't deteriorated at all since the RBA began hiking rates in May," he said.
"If Australian businesses were genuinely concerned about the economic outlook and the impact of high inflation and rising interest rates then we'd expect them to pull back on their hiring."
Mr Pickering said he saw signs that many workers were taking advantage of the strong employment conditions to seek a bigger pay rise.
"This is a job market that remains incredibly favourable to jobseekers, and challenging for recruitment," he said.
"Jobseekers have greater choice in where and how they work and are well positioned to bargain for higher wages or better conditions.
"They have also taken advantage of that, pushing job mobility to a decade high."
Supply of workers set to surge
But while the demand side of the equation remains strong, bottlenecks in the supply side are being ironed out.
A key one has been the lack of inbound workers from overseas during the pandemic, but this is now starting to change.
Preliminary ABS figures from earlier this week showed a 13.4 per cent jump in overseas arrivals, compared to a small rise in departures.
"Since August 2020, total arrivals have eclipsed departures by 195,030," noted CommSec chief economist Craig James.
"Basically this result was achieved in one month – last month – October 2020. Before last month, arrivals have matched departures for the 27-month period."
While many of these arrivals are short-term tourists, there are also healthy numbers of longer-term backpackers, students and other visa holders with working rights.
Georgiou Denzel is one of those recent arrivals, coming to Sydney from his home in the Philippines earlier this year.
He had wanted to come earlier to study early childhood education, but the closed border kept him away.
"When the borders opened I immediately came here because I was supposed to be [here] in 2021," he said.
While studying for his early education qualifications, since April Mr Denzel has also been working as a kitchen hand at Blue Fish cafe in Sydney's Darling Harbour.
"I'm doing dishwashing and preparing all the things to be cooked by the chef," he said.
His boss, Blue Fish managing director Glenn Boyland, said most of his staff were migrant workers.
"Over the 23-year history of us here, we always had a flow of very friendly backpackers coming in with their resumes, and students, leaving them here and requesting employment," he explained.
"The last two, three years, we would be lucky to have one person, if not maybe two, a month that might wander through and ask us about that."
Mr Boyland said the number of applicants had not yet returned to the rate it was before COVID-19 hit.
"Once the doors started opening again after COVID restrictions quietened down, we found ourselves with a high level of demand but we had a shortage of workers," he said.
Veeran Ragavan, originally from Malaysia, who works as a barista and waiter at the cafe, is happy to finally be welcoming some of his friends from back home to Australia.
"A couple of my friends … they planned to come to Australia for study. Unfortunately during COVID they couldn't fly and they couldn't even apply for the visa," he explained.
"The good thing is they just came, I think three months ago, so just recently they have been approved the visa and finally they are here."
'Upward pressure on the unemployment rate'
IFM chief economist Alex Joiner said the increase in the supply of workers through migration was likely to coincide with a slowdown in demand for workers as the post-COVID bounce for hospitality faded and higher interest rates started to bite in earnest.
"We're going to have a situation as we move into 2023 where labour demand might be a bit softer, labour supply will be a bit stronger, and that will put a little bit of upward pressure on the unemployment rate," he told The Business.
"So we won't have as tight a labour market as we're seeing now."
Mr Joiner expects the jobless rate to be a little above 4 per cent sometime next year.
Many employers such as Glenn Boyland remain unconvinced that the current severe labour shortage will have eased by then.
Workers on student visas have been allowed to increase their hours from a pre-COVID maximum of 20 to help alleviate the worker shortage.
That will end on June 30 next year and the 20-hour cap will be reintroduced.
"When that happens, I really don't see how we're going to be able to navigate those type of restrictions," Mr Boyland said.
The government has also fast-tracked visa applications. But Mr Boyland said there was still a lot of red tape.
"The pathways of these immigrants coming through, and the students, they really need to be much more manageable and easy to navigate," he said.
"Unless they do change that, there's going to be a real worker shortage."
Overseas worker arrivals 'starting to take off'
Professional services recruitment firm Robert Half surveyed employers about their hiring intentions, with most of them saying they would recruit from overseas to help fill their workforce shortages.
"It was very slow to kick off with, in terms of international talent coming onto Australian soil, but now we're just starting to see that really take off," Robert Half director Nicole Gorton said.
"Countries like South Africa, New Zealand, the UK, China, India, Canada, where we're now in a position for Australian organisations where they are being able to access this talent."
The recruitment firm is also seeing an increase in applications from foreign talent in the Philippines, the US, Singapore, Malaysia and the UAE.
Mailk Rehman moved to Australia from Saudi Arabia four months ago.
"I decided [to move to Australia] in 2018, but then I procrastinated and I thought that I'm going to move one day or another. Eventually COVID hit," he told The Business.
"Post-COVID, the Australian market, rather than just reducing the number of vacancies, it has it actually doubled, and it was a good opportunity.
"The market is really booming, specifically for the cybersecurity people."
Mr Rehman takes on short-term contracts consulting for businesses about cybersecurity risks.
He said applying for a visa to come to Australia could take a long time and some people ended up withdrawing their application.
"It was quite an easy process, but the processing time line was really, really hard. It took a lot, I think more than 10 months, just to process it," he said.
"Actually, it turned me off at the point when it was taking too long … I think if the processing time is going stay the same way, it's going to put off many people."
COVID-19 absences down
Another potential reason for the increase in the available labour pool is a fall in the number of workers who have had to take time off due to illness.
The level of absenteeism through sickness fell during the survey period in early October, although this pre-dated the COVID wave currently sweeping much of Australia.
"While the number of people working fewer hours due to sickness was around a third higher than we'd usually see in October, it was no longer two-to-three times higher, as it was earlier in 2022," Mr Jarvis observed.
"October was the first month in 2022 where the number of people [off sick] was less than half a million."