‘There has never been this many jobs to fill’: The Australian economy is bouncing back, but wage growth may not follow

Construction jobs are booming. (David L. Ryan, The Boston Globe via Getty Images)

• The Australian job market is rebounding strongly as job vacancies hit a record high.
• Data from Indeed provided exclusively to Business Insider Australia shows job vacancies are 32.2% higher than they were before the pandemic began.
• With JobKeeper having now ended, ANZ senior economist Catherine Birch said strong growth elsewhere will help offset up to 150,000 job losses.
• Visit Business Insider Australia’s homepage for more stories.

Australia’s economic recovery looks to be well and truly underway as the labour market continues to tighten.

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Job vacancies are at a record high, with exclusive data from Indeed showing they ended last month 32.2% higher than they were on February 1 2020. It is echoed by official ANZ data out on Tuesday that puts the figure at 23% higher after a healthy 7.4% jump in March.

“Job gains recently have been impressive and job vacancies are currently at a record high. Quite simply there has never been this many jobs available, ready to fill,” Indeed Asia-Pacific economist Callam Pickering said.

Vacancies rose sharply over the last two weeks of March across every state and territory, with a “recent surge” in New South Wales. Given “high vacancies traditionally translate into rising employment”, Pickering expects Australia’s unemployment rate of 5.8% will continue to fall in the coming months, if Australia can overcome two major challenges.

“The end of JobKeeper will weigh on employment, proving disruptive for Australian small businesses. Meanwhile, the bungled vaccine rollout, combined with the end of JobKeeper, leaves the economy more vulnerable to lockdown,” he said.

The former is estimated by some to shed up to 150,000 jobs but ANZ senior economist Catherine Birch said it will be offset by strong growth elsewhere.

“We think net employment losses will be smaller, as growing labour demand elsewhere should mean many workers find a new job relatively quickly. While we expect a temporary rise in the unemployment rate in [the second quarter], we think it will resume its rapid downward trajectory in [the second half of] 2021,” Birch said.

The vaccine rollout meanwhile remains key to opening international borders and kickstarting migration again. Without it, it may be difficult to achieve the RBA’s target of significantly growing wages, according to Pickering.

“With population growth so low there is a possibility that the labour market tightens faster than anticipated, with skill shortages emerging that puts pressure on wage growth,” he said.

“That’s a dynamic that has changed considerably compared with before the pandemic. Australian population growth has historically been quite high, such that even strong employment growth has struggled to lower the unemployment rate.”

There is still plenty to be done to get Australians back to work however. The end of JobKeeper combined with an early Easter break is expected to “moderate” jobs growth during April. Meanwhile hospitality and tourism vacancies remain 23% lower than prior to the pandemic, with vets and those in insurance also out of demand.

Now with JobKeeper out of the equation, economists expect the recovery to be bumpy.