The year 2022 was one to remember for job gains in Australia. The latest Australian Bureau of Statistics (ABS) Labour Force Survey data released last week 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 combination of rapid job gains and COVID-induced structural changes to the ways of work in some occupations meant that Australia saw a shift in the employer-worker relationship towards a greater say for workers.
The missing piece in what otherwise might have been the year of the employee has been wage gains. Workers reluctantly received a real wage decline (wage growth adjusted for inflation) of 4.2% near the end of 2022, the largest since the ABS wage data commenced.
Deloitte Access Economics latest Employment Forecasts report outlines that 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.
That downward trend was apparent in the ABS Labour Force Survey numbers – showing that employment decreased by 11,500 people nationally in seasonally adjusted terms, alongside an increase in the unemployment rate to 3.7%.
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 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.
Source: Deloitte Access Economics Employment Forecasts
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, before declining in 2024.
This could 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 emerge 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.
But as labour market pressures ease employers are likely to have a greater say over workplace norms in 2023. The irony might be that, as employees lose some of their bargaining power, they might reclaim some real wages growth.
This blog was co-authored by Hamish Burrell, a Senior Analyst in the Deloitte Access Economics team.