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Unemployment in Australia nudged higher to 6.9% in September, with 29,500 more people out of work.
For the second consecutive month, Australia’s labour force outperformed expectations, although underemployment and youth unemployment continued to worsen.
After a surprise 0.7% drop in unemployment from 7.5% to 6.8% in August the Australian Bureau of Statistics release on Thursday revealed the loss of 20,100 full-time jobs and 9,400 part-time jobs in September.
Underemployment also increased by 0.1% to 11.4%, despite an 8.7m increase in hours worked. Participation decreased by 0.1 points to 64.8%.
Before the release of the unexpectedly steady figures, the Reserve Bank governor, Phil Lowe, said a recovery in the Australian economy “is now under way” but the shape and nature of it “remains highly uncertain”.
The federal budget projected that unemployment will reach 7.25% in 2020-21 and delivered more than $30bn of tax concessions to business and $18bn of income tax cuts to households to spur the recovery.
In a speech to an investment conference on Thursday, Lowe questioned whether households and businesses would spend and invest after building up savings buffers during the Covid-19 pandemic.
Lowe also noted the highly “uneven” impact of the Covid-19 recession, with “around 500,000 people under 35 losing their jobs in the early stages of the pandemic, and around 300,000 still out of work in August”.
That trend continued in September, with youth unemployment rate up 0.4 points to 14.5%. Women and men seem to be leaving the labour market at similar rates – participation is down 0.1 pts for men (to 69.6%) and 0.1 pts for women (to 60.1%).
The budget contained $4bn for youth wage subsidies but Labor and unions have targeted the government for failing to help older workers and to provide cheaper childcare to increase participation.
State by state, the Northern Territory had the biggest hit to employment (-5.5%) in September, followed by Victoria (-1.1%). Despite that, unemployment decreased in Victoria by 0.5%, due to a 1% decrease in the participation rate.
The Victorian underemployment rate of 14.9% is also much higher than the Australian average (11.4%), reflecting the lockdown.
Several states added jobs, with the number of employed people rising in Queensland (1.3%), South Australia (1%), Western Australia (0.2%) and New South Wales (0.1%).
Lowe said while the RBA had heard of labour shortages in WA, at the other end of the spectrum, in Victoria, jobs had fallen by 8% since March.
“Retail spending in Victoria in August was also 11% lower than at the start of the year – in contrast, spending in the rest of the country was up by 13%,” he said.
Lowe noted that the savings rate had increased due to increased government payments and early access to superannuation allowing households to pay down debt.
He said household income was likely to decrease in the December quarter as government supports became “more targeted” but argued it was “entirely possible” spending could increase if households draw on accumulated buffers.
It was “entirely appropriate” for the government to use fiscal policy to boost the economy, Lowe said, welcoming the fact that the budget provided “further support to the economy”.
After $98bn of new spending in the budget and public debt set to top $1tn, Lowe said the debt was “entirely manageable” due to the lowest interest rates in history.
Labor seized on the jobs results, with its employment spokesman, Brendan O’Connor, warning that jobkeeper wage subsidies would expire in March and “many more jobs” were likely to disappear.
The Australian Council of Trade Unions president, Michele O’Neil, said the Morrison government had “cut back critical support payments” by reducing jobkeeper and the coronavirus supplement in September.
“Now is not the time for the government to be cutting back – 160,000 workers are expected to lose their jobs between now and the end of the year,” she said. “The government needs to recommit to supporting these workers and start creating secure jobs to lift the economy out of recession.”
Source: The Guardian
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