With recent unemployment figures confirming a 48-year low in the number of people looking for work, the market for Australian job seekers is still booming, and has been for the last 12 months.
Indeed, many commentators have been concerned such a high demand for workers may lead to wage inflation, and ultimately higher interest rates, as this increased spending power filters through to increased prices.
However, news out of the US this week suggests things may be changing. The job market in the world’s largest economy is showing signs of coming off the boil, with big technology companies such as Google and Meta signalling hiring freezes in recent weeks.
Although the US employment market is not directly related to Australia’s, the two economies are both experiencing high inflation and rising interest rates. Which begs the question, should we be expecting the same fall off in employment prospects here in Australia?
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No sign of a downturn yet
Yahoo Finance spoke with Charles Cameron, CEO of Recruitment, Consulting & Staffing Association (RCSA), to find out if his organisation’s members, who manage the workforce demands of many employers, have noticed any signs of a downturn.
“Our members are still seeing extremely high demand for staff across all sectors, which is borne out by our latest job report,” Cameron said.
The jobs report he refers to is the latest survey of job advertisements commissioned by his organisation over the June quarter, which found that the number of online job adverts increased 7 per cent over the last three months.
While Cameron recognised this report was a retrospective look at the market rather than an indication of what may be around the corner, he was equally bullish on the short-term future.
“Looking forward, we have had no indication as yet that this demand is likely to fall in the next few months, irrespective of projected higher interest rates,” he said.
While homeowners may be dreading further interest rate hikes, it seems the employment market is shrugging off those concerns so far.
So, what is driving this confidence?
Backlog of job vacancies still high
One of the primary reasons for Cameron’s prediction is the significant backlog of unfilled vacancies in many sectors.
This is a hangover from the pandemic, which resulted in a significant reduction in skilled migration, traditionally a key source of labour for Australian businesses.
“Even if new job creation starts to decline, which we have yet to see, the number of unfilled vacancies in the market will ensure plenty of work in the short to medium term,” Cameron said.
One area he did concede was starting to see plateauing demand was the Executive Search sector, as companies were taking stock of their leadership options given the uncertain economic climate.
However, Cameron feels the bulk of job seekers can expect employment opportunities to remain plentiful in the coming months, partly due to the backlog of vacancies showing no sign of being cleared.
A unique set of circumstances for Australia
Given the confidence in Australia's employment market, why is the situation so different in the US?
The answer lies in the unique set of circumstances that Australia finds itself in.
The availability of skilled resources, due in part to Australia’s closed border policy during the pandemic, has driven the backlog of unfilled vacancies mentioned earlier.
Although painful for employers, this has increased demand for local workers. Given the number of travellers arriving on our shores is still significantly down on pre-pandemic levels, this is likely to continue.
Another significant difference to the US is Australia’s inflation rate, which although historically high (5.1 per cent in the latest figures), is still well below the astronomical 9.1 per cent the US is currently experiencing.
As a result, interest rates are likely to rise far quicker in the US as the US Federal Reserve battles to get inflation under control.
It appears this is already being factored in by US employers, who are starting to batten down the hatches for a potential recession.
Although there is no place for complacency given the global economic outlook, the Australian employment market seems well placed to see off the challenges ahead, at least in the short term.
Interestingly, Cameron concludes that another factor should be front of mind when setting policy for optimal job market conditions.
“It may not be interest rates that will impact job creation, but rather the inability to access the talent employers require,” he said, alluding to the continuing lack of skilled migration to Australia, and the impact that is having on local businesses.
This is sure to be on the agenda for the upcoming Jobs Summit recently announced by the Albanese government, which will look to address a number of employment issues.
In the meantime, Australians seem set to continue having a wealth of job opportunities, even if interest rates continue to rise.