The year 2022 was one to remember for job gains in Australia. Latest ABS Labour Force Survey data shows that compared to December 2021 an additional 450,000 Australians were in employment by the end of 2022, blitzing pre-pandemic growth records.
Other features included:
The health care, construction and accommodation & food services industries saw the largest employment gains.
At least for the white collar occupations that could facilitate working from home arrangements, workers managed to hold on to increased workplace flexibility
The share of workers looking to change job increased due to greater opportunities. But movements were only slightly elevated suggesting that the ‘great resignation’ never quite 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.
Releasing Deloitte Access Economics’ latest quarterly Employment Forecasts report, Deloitte Access Economics partner and report lead author, David Rumbens, said: “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 fry in relation 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 Australian Bureau of Statistics wage data commenced.”
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 Access Economics director and report co-author, Blair Chapman, said: “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 Access Economics 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 released today. It shows employment decreased 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 and as a share of the labour force the decline was more in line with the 1990s than the last decade or two. Although, the ABS noted that there was also a higher than usual number of unemployed people expecting to start a job.
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 the June quarter of 2023.
Deloitte Access Economics also expects national white collar employment growth to moderate in the 2023 calendar year to 170,800 workers, a significant slowdown 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 said.
“In terms of CBD markets, Sydney is expected to drive white collar CBD employment in 2023. But gains will in large part depend on Sydney receiving higher international migrant, tourist, and student numbers through the year.
“And 2023 may also be the year where employers and employees battle for workplace influence. There is a growing list of US companies that 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, and its likely to differ by occupation and workplace, with skill shortages becoming less severe workers may find themselves with fewer employment options.”
“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 Access Economics forecasts that Australian workers may see real wage growth by the March quarter of 2024.
“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,” Rumbens said.
Employment Forecasts is released quarterly and provides forecasts and commentary for each industry, plus white collar and blue collar employment. There are three levels of data available: state, city and CBD. Employment Forecasts is particularly useful in the analysis of property market demand.
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