Why a record low unemployment rate might not be as good as you think
It might be simple to see the record low unemployment figure of 4.5% for August and think this it’s great when compared to an unemployment rate of 4.6% in July and 4.9% in June. However, it isn’t as simple as that.
We need to look at how the labour force and participation rate is determined.
It’s important to look at the shifting of numbers from the labour force to people now declared not in the labour force. For August 2021, the working age population stood at 20,919,785.
This number is made up of the labour force – that is people both employed (either full-time, part-time or underemployed) and people unemployed and people not in the labour force, however still of working age.
The total number of people in the labour force last month reduced a total of 168,100. In the same period, the number of people not in the labour force increased by 166,976.
The participation rate of the working age population decreased from 66% in July to 65.2% last month.
Since the number of people that have left the labour force has fallen in relation to the working age population, it appears while unemployed has technically fallen, more people have left the market.
One last thing to be wary of is the underemployed rate.
Last month, the underemployment rate increased from 8.3% to 9.3%. The underemployment rate seeks to measure the number of people employed who are available and wanting to work additional hours expressed as a share of the labour force.
We are seeing not only trend of the labour force shrinking of eligible working population but also a shift in the type of employment that these people are working.
What does HOBAN think?
For the short term, we see the market continuing to be ‘candidate-tight’. However, change might be on the horizon, with both Victoria and New South Wales recently announcing their pathways to opening up over the next few months and the Federal Government hinting that international travel and border reopening before Christmas.
But there is a lot you can do as an employer to work in this candidate market right now. With lower rates of applications per jobs available, there is a lot of choice for candidates. Employers can stand out from the crowd by communicating their employee value proposition (EVP).
Don’t have an EVP? Don’t know where to start? No problem.
HOBAN Recruitment recently held a HR Seminar with three key speakers looking at ways to promote employee value. The overarching message of the webinar was to develop different ways to retain your key talent while being an attractive employer to other candidates in the market.
If you would like to view this webinar, you can request a copy by following this link or don’t hesitate to contact me using the details below if you would like a copy.
You can also contact me at any time if you would like to discuss how HOBAN Recruitment can support you and your organisation from understanding the market and its trends for your industry to anything else staffing related.
