The recent debate about full employment and how we define it has come at an important and welcome time.
More Australians are in work than ever before and the participation rate is near an all‑time high.
Nearly 500,000 jobs have been created in just over a year, the fastest pace of growth under a new Australian government on record.
And remarkably, our unemployment rate now has a ‘3’ in front of it – something that only a few years ago seemed inconceivable.
Amid the pressures coming at us from around the world and being felt around the kitchen tables of Australia, our robust labour market has been a source of strength for our economy.
It’s why the Albanese Government has been so enthusiastic about a discussion over full employment and how we manage the economy in a way that maximises opportunities for more Australians.
And it’s why the first priority of the Employment White Paper that we will release in September will be to better articulate a full employment objective.
As part of the debate about full employment, it shouldn’t be particularly controversial to point out there’s a big difference between a technical assumption that feeds a forecast and our much wider objectives and aspirations to get more Australians into secure, well‑paid jobs.
One of the statistical measures the Reserve Bank and Treasury use when monitoring the labour market is something called the NAIRU – the non‑accelerating inflation rate of unemployment.
As the name suggests, it’s the minimum level of unemployment that is not expected to trigger supply constraints and inflation in the near term.
Treasury estimates the NAIRU to be around 4¼ per cent but acknowledges there’s significant uncertainty around it and it changes over time alongside the structure of our economy and the skills of the workforce.
While it’s a useful measure, it doesn’t capture the full potential of our workforce and it shouldn’t – and doesn’t – limit the Government’s ambitions for getting more Australians into work.
There’s much that can be done to deal with structural issues that cause unemployment – from helping people acquire new skills or find affordable childcare to making it easier to find housing in areas where jobs are available.
If we succeed in reducing these structural sources of unemployment, we can improve the level of full employment that our economy can sustain – pushing the NAIRU statistical measure lower and increasing the speed limit on our economy.
That’s why we need to have much bolder and broader aspirations for employment outcomes.
The Albanese Government’s ambition is to create an economy where anyone who wants a job can get a job without searching for too long – a job with good pay and conditions.
Our agenda is focused on investing in the skills and education of our workforce, strengthening dynamism and reducing barriers to work, supporting mobility by building housing close to where the opportunities are being created, and working to tackle entrenched disadvantage in our communities.
There’s more common ground than there might initially seem between business, unions, policymakers and community groups – certainly that was clear at the Jobs and Skills Summit in September last year.
As I said at the time, we need to view the unemployment rate near a 50‑year low as being a once‑in‑50‑year opportunity to make sure the labour market delivers what we need it to.
Even with a jobless rate at 3.5 per cent, there’s still a much bigger story to tell about the capacity and potential of the labour market in our changing economy.
We know there are more people willing and able to work or to work more hours than show up in the monthly unemployment figures, and there’s more that can be done to help those that have been locked out of the jobs market.
An extraordinary and overlooked success of recent times has been the almost halving of the number of long‑term unemployed from the levels seen prior to the pandemic.
More than 70,000 people, many of whom had been marginalised from the jobs market and deemed unemployable by some, have now gained work. That’s 70,000 lives transformed by the security, dignity and stability of work.
It’s outcomes like this that motivate the Albanese Government.
As we confront the challenges ahead, refining our approach to full employment will be critical in ensuring we create an economy that delivers more opportunities for more Australians in more parts of the country.
