Is the unemployment rate dropping because jobs are increasing?
For the unemployment rate to drop for healthy sustainable reasons, employment must increase faster than the working-age population. This way, growth in employment accounts for the increase in the working-age population and migrant workers coming to Australia. So to maintain job growth, we are forced to hire from the unemployed rather than bringing in workers from overseas alone.
The current drop in unemployment is not due to an increase in the number of jobs on offer but a spike in job vacancies caused by a drop in migrant workers. Our current labour force isn’t big enough to fulfil our labour requirements. Job vacancies increased by 18.5% in the last quarter of 2021
We can see from the ABS data below that after the initial shock of COVID in 2020, job vacancies skyrocketed and in turn, the unemployment rate plummeted as migrant workers disappeared.
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