Australia

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Employment Opportunities

Employment Opportunities

Labour market conditions strengthened between June 2015 and June 2016. The level of employment increased by 225,000 (or 1.9 per cent) to stand at 11,939,600 in June 2016, above the annual average growth rate over the past 10 years. It is worth noting, however, that employment growth was particularly strong in the second half of 2015, up by 181,600 (or 1.5 per cent), compared with a very modest increase of 43,400 (or 0.4 per cent) in the first half of 2016.

Female participation accounted for around 60 per cent of employment growth. In 2015-16, female employment was up by 136,200 compared with 88,800 for males.

The pace of trend employment growth also softened, going from a peak of 31,000 jobs a month in October 2015 to just 8,300 in June 2016.

The increase in employment between June 2015 and June 2016 was due primarily to strong growth in part-time employment, which rose by 134,400 (or 3.7 per cent) to stand at a record high of 3,740,700 in June 2016. On the other hand, the level of full-time employment increased by a more modest 90,600 (or 1.1 per cent) over the period, to 8,198,900 in June 2016. This shift towards part-time employment is also reflected in aggregate monthly hours worked, which rose by a modest 0.6 per cent between June 2015 and June 2016.

Against this background, the level of unemployment in Australia fell by 23,100 (or 3.1 per cent) between June 2015 and June 2016, and the unemployment rate declined, from 6.1 per cent in June 2015 to 5.8 per cent in June 2016. The fall in the unemployment rate occurred in conjunction with a 0.1 percentage point increase in the participation rate over the period, to 64.9 per cent in June 2016.

The improvement in labour market conditions between June 2015 and June 2016 reflects, in part, the ongoing structural shift towards the more labour-intensive services sector. Strong growth was recorded in a number of service-based industries. Employment increased in 12 of the 19 broad industries between May 2015 and May 2016 (latest available data). The largest increases were in health care and social assistance (up by 71,600 or 4.9 per cent), construction (up by 44,300 or 4.3 per cent) and retail trade (up by 40,700 or 3.3 per cent).

By contrast, large declines were recorded in wholesale trade (down by 20,400 or 5.2 per cent), professional, scientific and technical services (down by 19,700 or 2.0 per cent) and manufacturing (down by 15,400 or 1.7 per cent). Employment in mining rose modestly over the period (up by 2,400 or 1.1 per cent). However, this increase should be viewed in the context of the large decline in mining employment (by 47,300 or 17.3 per cent) since its peak in August 2012, resulting from lower commodity prices and the ongoing transition away from the labour-intensive construction phase to the production phase of the cycle.

Reflecting the overall strengthening in the labour market, conditions for young people improved somewhat between June 2015 and June 2016. The youth unemployment rate declined marginally over the period, to stand at 13.2 per cent in June 2016, although it remains more than double the rate recorded for all persons. While the level of youth employment increased over the period by 22,300 (or 1.2 per cent), this was due entirely to a rise in part-time employment (up by 30,400 or 3.2 per cent). By contrast, the level of youth full-time employment declined (by 8,700 or 1.0 per cent). However, this occurred in conjunction with a 0.6 percentage point increase in the proportion of youth participating in full-time education, which rose to a record high of 52.4 per cent in June 2016.

Notwithstanding the general strengthening in labour market conditions between June 2015 and June 2016, a number of risks to the labour market outlook remain. These include a further moderation of growth in China as its economy transitions away from investment-led growth, and uncertainty around commodity prices, which have fallen considerably from their historic highs in 2011. That said, the Treasury’s forecasts in the 2016 Pre-election Economic and Fiscal Outlook are for employment to increase by 1.75 per cent over both 2016–17 and 2017–18. The unemployment rate is expected to decline to 5.5 per cent in 2016–17, and remain at that rate in 2017–18.

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