The unemployment rate in Australia has plummeted to 5.8 per cent as 89,000 Australians returned to work over February, blowing expectations of a 6.3 per cent unemployment rate out of the water.
“The strong employment growth this month saw employment rise above 13 million people, and was 4,000 people higher than March 2020," Australian Bureau of Statistics head of labour statistics Bjorn Jarvis said on Thursday.
“Full-time employment increased by 89,000 people, of which 69,000 were women. Female full-time employment was 1.8 per cent higher than March 2020, while male full-time employment was 0.8 per cent below.”
The youth unemployment rate also fell 1.1 per cent to 12.9 per cent, as 31,000 young people returned to work.
However, underemployment - or the number of people who would like to work more hours - increased to 8.5 per cent.
JobKeeper winding down, concerns unemployment will balloon
However, there are concerns the impending expiry of the JobKeeper supplement at the end of March will see this number rise again.
The government wage subsidy currently supports some 1.3 million jobs. When it ends on 28 March, as many as 250,000 Australians could join the jobless queue, Melbourne University economics professor Jeff Borland predicted, while economists at the Commonwealth Bank predict 110,000 jobs will be lost when JobKeeper ends.
Treasurer Josh Frydenberg also admitted the jobless rate will likely balloon after the JobKeeper payment winds down.
“There’s still a way to go and it will be bumpy when JobKeeper comes to an end,” he told the ABC on Tuesday.
The weekly ANZ-Roy Morgan consumer confidence index fell 0.9 per cent this week, eroding more than half of the previous week’s improvement.
"It is possible the drop in confidence could be linked to consumers being apprehensive about a future without the JobKeeper program," ANZ head of Australian economics David Plank said.
Speaking to mark Thursday's jobs figures, Prime Minister Scott Morrison said the subsidy had to be removed to prevent the economy becoming reliant upon it.
"If these programs go beyond what has been their effective period, they can start to hold the economy back. It can create problems in the mobility of the labour force. We have got tens of thousands of jobs in the latest job vacancy data coming through. They are continuing to rise," Morrison said.
"There are more than 50,000 jobs in regional jobs are out there."
But full employment is the goal
While the fall in unemployment is welcome, Reserve Bank of Australia (RBA) governor Philip Lowe said the RBA now has its eye on reaching full employment.
Full employment is considered an unemployment rate of 4 per cent or less, and would trigger an increase in wages, as a large pool of unemployed people naturally keeps wages lower.
“These are our goals and we are committed to achieving them,” he said.
The last time Australia had full employment was in the 1970s.
Tightened JobSeeker requirements begin 1 April
JobKeeper will wind down at the same time as the JobSeeker requirements are increased.
Australians on the unemployment benefit will now be required to search for at least 15 jobs a month from April, and 20 per month from July.
The payment will also essentially fall $100 a fortnight with the end of the Coronavirus Supplement.
Tasmanian Liberal MP Bridget Archer broke ranks on Tuesday to criticise the scheme, describing the job search requirements as “very unhelpful”, noting the “very modest increase” to the base payment.
"There is an opportunity to ensure we look at how mutual obligation can be a more useful tool for those seeking work, rather than the increasingly meaningless burden it puts on both the potential employer and the potential employee," she said.
"I fail to see how encouraging jobseekers to apply for jobs that they are in no way able to fill is helping anyone."