As Australia’s jobless rate eased to a post-Covid low of 5.5% in April from March’s 5.7% (revised up from the first estimate of 5.6%), Qantas revealed plans to add to the pool of unemployed and freeze wages for two more years.
The Labour Force report from last month from the Australian Bureau of Statistics (ABS) surprised with the better-than-expected jobless rate which came despite the number of employed people falling in the month.
Market consensus was for the unemployment rate to remain steady at 5.6% and for 15,000 to 20,000 new jobs to be added.
In fact there were 31,000 fewer people with jobs during the month.
And yet many people overlooked a more significant figure in the report – an extra 161,000 jobs in January and February, due to upward revisions of 84,000 in February and 77,000 in March.
The AMP’s chief economist, Shane Oliver reckons April’s fall of 31,000 (30,600 actually) “owes to normal month to month volatility after two far stronger than expected months for jobs growth” as shown by the upward revisions.
Qantas’s news on retrenchments and the pay freeze came as it revealed it will lose more than $2 billion this financial year (to June 30) on top of the $2 billion loss in 2019-20 (see separate story).
In a trading update on Thursday it said the loss would come despite a rebound in domestic travel which will reach 95% of pre-Covid levels this quarter.
It put back the restart of its international travel till December from October (that’s despite the government saying in the budget borders would not re-open until midway through 2022.)
Qantas said it expected “several hundred” international cabin crew to leave the company in a new round of voluntary redundancies announced on Thursday, which comes on top of 8,500 jobs already lost since the start of the pandemic.
Around 16,000 of the company’s 22,000 remaining staff are now back at work following mass stand downs last year. The company said it would impose a two-year wage freeze on staff.
That will be bad news for the ambitions of the Reserve Bank and federal government to boost wages growth and inflation by 2024.
The ABS said the 0.2% fall in employment was due to a decline in female employment of 0.5% (which pushed down the overall participation rate) while male employment rose 0.1%. Female hours fell by 1.6 per cent, while male hours remained steady.
The end of the JobKeeper wage subsidy did not have a discernible impact on employment between March and April, according to analysis by the ABS.
“We have not seen large changes in the indicators that would suggest a clear JobKeeper impact, such as an increase in people working reduced or zero hours for economic reasons or because they were leaving their job. We also haven’t seen large net flows out of employment across many population groups,” head of labour statistics at the ABS Bjorn Jarvis said in a statement with the report on Thursday
“Some of the 31,000 fall in employment may relate to the end of JobKeeper, but it could also reflect usual month-to-month variation in the labour market and some larger than usual seasonal changes similar to those we saw earlier in the year.“
“The unemployment rate is now 0.2 percentage points (or 33,000 people) above the start of the pandemic. Importantly, it’s 2.0 percentage points below its peak in July 2020, when it was 7.4 per cent,” Mr Jarvis said.
“The youth unemployment rate fell to its lowest level since the Global Financial Crisis, reflecting a strong increase in employment for young men, following a number of increases for young women in recent months.”
The falls in both employment and unemployment in April saw the participate rate decrease 0.3 percentage points to 66.0 per cent – back to around its pre-pandemic levels.
Underemployment fell 0.2 percentage points to 7.8% in April 2021, 1.0 percentage point below its pre-pandemic level (8.8 per cent).
The underutilisation rate, which combines unemployment and underemployment, fell by 0.4 percentage point to 13.3%.
The ABS pointed out that this was 6.8 percentage points below its peak in April 2020, and 0.8 percentage points below the start of the pandemic, “reflecting the continued fall in underemployment.”
In a commentary yesterday afternoon, the AMP’s, Shane Oliver was upbeat about the data.
“Note also that the trend in unemployment remains down and its usually a better indicator of the state of the jobs market than month to month employment swings, and the rise in full time jobs is a positive sign.
“Looking more broadly, our Jobs Leading Indicator suggests that the fall in employment in April is just a temporary setback with strong jobs growth likely to resume in the months ahead reflecting record or near record levels for job vacancies, job advertisements (across various indicators) and business hiring plans.
“Bear in mind though that this is partly catch up to the slump in jobs seen in April-May last year. The high level of job vacancies would suggest that most of those who have lost their jobs as a result of the end of JobKeeper should be able to find new jobs,” Dr Oliver concluded.
