Unemployment rate remains flat during Omicron-riddled January, with hours worked plunging

New figures have revealed the incredible toll of the Omicron wave on the hours Australians worked in January.

A staggering surge in sick leave and absences reducing total time worked by 159 million hours over January, but did not translate to a drop in overall unemployment.

The Australian Bureau of Statistics on Thursday announced the nation’s jobless rate remained steady at a 13-year-low 4.2 per cent during the first month of the year, in line with market expectations.

There was, however, a near nine per cent fall in hours worked in January as more people than usual took annual leave and sick leave, exacerbating the supply chain issues caused by a surging Omicron wave.

Nationally, and in New South Wales and Victoria, the number of people who worked reduced hours because they were sick was around three times the pre-pandemic average for January. Picture: NCA NewsWire / David Crosling

ABS head of labour statistics Bjorn Jarvis said nationally, and in New South Wales and Victoria, the number of people who worked reduced hours because they were sick was around three times the pre-pandemic average for January.

“In other states and territories, it was twice as many people. Western Australia was the only jurisdiction with a usual low number of people working reduced hours in January because they were sick,” Mr Jarvis said.

The number of people working no hours at all in a week because they were sick was particularly high at more than four times the pre-pandemic average.

At the peak of absences, Mr Jarvis said 3.4 per cent of Australia’s employed population were off work.

The ASX 200 ticked higher after the release of Thursday’s data while the Aussie dollar is hovering around 72 US cents. Picture: NCA NewsWire / Gaye Gerard

“January is the middle of summer and usually only around 90,000 to 100,000 people in Australia are away from work sick for an entire week. In January 2022 it was around 450,000 people,” Mr Jarvis said.

Callam Pickering, APAC economist at jobs site Indeed.com, said the labour market appeared to have held up quite well during January despite the spread of the virus.

“With employment continuing to rise the omicron variant is unlikely to leave a lasting impact,” Mr Pickering said.

“More broadly, we start 2022 with the tightest labour market Australia has experienced since the global financial crisis began in 2008. It has created a headache for recruiters across the country but should prove beneficial to jobseekers.”

The number of jobs added to the economy softened from an additional 64,800 roles in December to just 12,900 in January, with a total 13.3 million people now employed.

Full-time employment took a hit during the month – with 17,000 jobs disappearing – although part-time employment increased by 30,000.

This pushed the underemployment rate up by 0.1 points to 6.7 per cent.

The ASX 200 ticked higher after the release of Thursday’s data while the Aussie dollar is hovering around 72 US cents.

Mr Pickering said forward-looking measures, such as job vacancies and job advertisements, suggested that the labour market is only going to tighten further.

He tipped the jobless rate to fall below 4 per cent by mid-2022.

The data is also not likely to have hastened the Reserve Bank’s desire to hike rates fro a record low 0.1 per cent, given the ongoing uncertainty of the pandemic.

“Tightening is certainly possible this year, with August the most likely starting point, but the Reserve Bank would like to see stronger wage growth before they pull the trigger,” Mr Pickering said.