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Australia sees more jobs lost to lockdowns, but recovery attracts

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SYDNEY – Australian employment fell sharply for a second month in September as coronavirus lockdowns forced companies to lay off workers, while the unemployment rate was held back by another large drop in the number of job seekers.

Policymakers are counting on a recovery in the coming months as rapid progress on vaccines has allowed restrictions in Sydney to be eased, with Melbourne and Canberra to follow soon.

Relief was urgently needed with Thursday’s data from the Australian Bureau of Statistics (ABS) showing employment fell 138,000 in September, on top of a 146,100 drop in August.


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The unemployment rate rose to 4.6%, from 4.5%, but has been artificially held back by restrictions that prevent people from looking for work and considering themselves unemployed.

“The low national unemployment rate continues to reflect a reduction in participation during the recent lockdowns, rather than strong labor market conditions,” said Bjorn Jarvis, ABS head of labor statistics.

The participation rate fell 0.7 percentage points in September to 64.5%, far from a record of 66.2% reached in June. As this shift unfolds, the unemployment rate could rise in the coming months even as employment recovers.

The Reserve Bank of Australia (RBA) has warned that unemployment will likely exceed 5% by the end of the year, although it is optimistic that activity will pick up quickly as closures ease.


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The central bank still believes that the unemployment rate will have to fall to 4% or less to fuel a sustained and much-needed rise in wages and inflation.

Speaking Thursday, RBA Lieutenant Governor Guy Debelle noted that while the labor market had enjoyed a strong recovery before the closings, wages remained stubbornly subdued and very few workers saw annual increases of more than 2%.

The RBA has long argued that wage growth above 3% was needed to bring inflation to its 2-3% target band, after years of lack of scope.

Debelle said the lack of a rebound in wages and inflation meant Australia did not have to follow other developed nations to cut political stimulus.

Markets have recently started betting that the RBA could raise interest rates by the end of next year, while the bank itself goes on to say that a move is unlikely until 2024 (Wayne Cole Report, edited by Shri Navaratnam ).



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