The latest Australian Bureau of Statistics (ABS) Labour Force Survey shows that an additional 450,000 Australians were in employment in December 2022, compared to December 2021, blitzing pre-pandemic growth records, with the healthcare, construction and accommodation & food services industries experiencing the largest employment gains.
The report noted that the share of workers looking to change job increased due to greater opportunities. But movements were only slightly elevated, suggesting the ‘great resignation’ never eventuated in Australia.
The combination of rapid job gains and COVID-induced structural changes to the way of work in some occupations meant that Australia saw a shift in the employer-worker relationship towards a greater say for workers.
The latest Deloitte Access Economics Employment Forecasts report noted: “The missing piece in what otherwise might have been the year of the employee has been wage gains. Wages growth increased to 3.1% in the year to September 2022, but that was small compared to the inflation surge of 7.3% over the same period. Workers therefore reluctantly received a real wage decline of 4.2% near the end of 2022, the largest decline since the ABS wage data commenced.”
What’s in store for Australia’s labour market in 2023?
The Federal government is trying to solve the real wage decline through its industrial relations reforms – but these may be more bark than bite in the short-term.
Deloitte report co-author, Blair Chapman observed: “The current environment suggests there may be relatively few businesses electing to use Cooperative Workplace Agreements, the new name for multi-employer agreements. Instead, the mechanism is more likely to be used as a threat by unions to ensure that businesses are prepared to come to the table to negotiate traditional Enterprise Bargaining Agreements.
“Although pockets of employment growth are still likely through 2023, there are clear signs that the pace of improvement has started to moderate and the RBA’s ‘pincer-movement’ on consumers and credit-sensitive sectors will cost jobs.”
Deloitte expects employment to grow by 1.3% in 2023 – much slower than the 4.0% experienced in 2022 – and some areas will be hit harder than others. Demand for workers has been trending downward for the better part of the last six months with a 7.5% fall in job vacancies.
That downward trend was apparent in the ABS’s January Labour Force data, showing employment decreasing by 11,500 people nationally in seasonally adjusted terms, alongside an increase in the unemployment rate to 3.7%. Ignoring seasonal adjustment, this means that over 340,000 people left employment over the month, the largest ever decline in a January release. As a share of the labour force, the decline was more in line with the 1990s than the last decade or two.
While care should be taken not to read too much into a single month of data – especially since there was a higher than usual number of unemployed people expecting to start a job – the unemployment rate in January 2023 is already above the rate forecast by the Reserve Bank of Australia (RBA) for Q2 2023.
Deloitte also expects national white-collar employment growth to moderate in 2023 to 170,800 workers, significantly slowing down from the 778,800 white-collar workers added during the two years prior.
“Following above average growth in 2021 and 2022, the labour market slowdown will be more pronounced for blue-collar employment which is forecast to grow by just 7,500 workers in 2023,” Rumbens added. “Sydney is expected to drive white-collar CBD employment in 2023; but gains will largely depend on Sydney receiving higher international migrant, tourist, and student numbers through the year.
“And 2023 may also be when employers and employees battle for workplace influence. A growing list of US companies are ordering their employees to return to the office, some even full-time. So far, this trend is yet to occur in Australia, at least in a meaningful way as the labour market remains tight and businesses are still wary that they won’t be able to find new workers.
“The jury is still out on whether widespread working-from-home is aiding or detracting from productivity. But whatever the answer, workers may find themselves with fewer employment options as skill-shortages becoming less severe.”
“Employers are likely to have a greater say over workplace norms in 2023 as labour market pressures ease. The irony is that as employees lose some of their bargaining power, they might reclaim some real wages growth.”
Deloitte forecasts Australian wage-growth should rise gradually to 3.7% over the next 12 months, but with most of the action from inflation receding back to a more sustainable level. Real wage-growth for Australian workers may not come until Q1 2024.