Historic day as unemployment drops to 48-year low of 3.9pc

Australia can finally boast its lowest unemployment rate since 1974, after the key jobless measure reached 3.9 per cent in April.

Mission accomplished: unemployment has dropped below 4 per cent for the first time since 1974. Picture: NCA NewsWire / Jeremy Piper

Australia can boast its lowest unemployment rate since 1974, after the key jobless measure reached 3.9 per cent in April and triggered warnings from employers that whoever wins government on Saturday will need to take urgent action to ease chronic labour shortages.

The historic milestone was confirmed by official labour force statistics on Thursday, which showed an additional 4000 jobs were added last month, leaving unemployment below 4 per cent for the first time in 48 years.

Josh Frydenberg said the additional 400,000 people in employment since the start of the pandemic was the result of the “the most comprehensive range of economic responses in the face of the biggest economic shock since the Great Depression”.

“To see our unemployment rate today have a three in front of it is something that every Australian can be proud of. It’s not a good story; it’s an extraordinary story,” the Treasurer said.

Economists expect the jobless rate to continue to improve over the coming months, even as the Reserve Bank moves to tighten monetary policy to tame inflation, which has jumped to 20-year highs of 5.1 per cent.

Westpac senior economist Justin Smirk said the “robust” jobs numbers for April “keeps in place a pathway to our forecast low in unemployment of 3.2 per cent”.

Western Australia had the lowest unemployment rate in the country at 2.9 per cent in April, down 0.5 percentage points in the month and the lowest since 2008. Unemployment in NSW and South Australia improved by 0.4 percentage points to 3.5 per cent and 4.5 per cent, respectively.

But the jobless measure in Queensland climbed by half a percentage point to 4.5 per cent, and by 0.2 percentage points in Victoria, to 4.2 per cent.

The impact of climbing Covid case numbers on the workforce was also evident in the labour figures. ABS head of labour statistics Bjorn Jarvis said about 740,000 people worked reduced hours in April because of illness, “almost double what we usually saw in April before the pandemic”.

“Of these people, around 340,000 worked no hours, which was around triple what we would usually see,” Mr Jarvis said.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the flipside to the sharp drop in unemployment were “the most severe workforce shortages in 48 years”.

 

Mr McKellar said Covid absenteeism was making it even more difficult for employers to operate at full capacity. He said “the next federal government must pull all the levers it can to address chronic skills shortages”, including a long-term commitment to vocational education and training, increasing the number of permanent skilled migrants, and making it more attractive for parents and pensioners to work more hours.

Amid an ongoing stoush between employers and unions – and Scott Morrison and Anthony Albanese – over whether this year’s minimum wage increase should match the pace of inflation, Australian Industry Group chief Innes Willox said ongoing labour market gains “highlight the key benefits of the current period of wage moderation”. “It is critical that we stick to this path and create more opportunities for employment in the months ahead,” he said.

After revealing Labor would go into the election with a suite of policy commitments that would leave deficits $8.4bn larger than under the Coalition, opposition Treasury spokesman Jim Chalmers on Thursday said “Labor’s priority is to get real wages moving again”.

“The costings we released today, our economic plan, our budget strategy, is all about responsible quality investments in a stronger economy, and a better future,” Dr Chalmers said “The economy is crying out for these responsible investments, to grow the economy the right way and get productivity moving again, and to get real wages growing again.”

Underemployment – those with jobs but who want to work more hours – fell from 6.3 per cent to 6.1 per cent, the seasonally adjusted figures from the Australian Bureau of Statistics showed.

Full-time employment climbed by 92,400, while part-time jobs declined by 88,4000 in the month.

The participation rate dropped by 0.1 percentage point to 66.3 per cent, but was still around historical highs achieved in February.

The long-anticipated jobs milestone was actually reached a month earlier, after the ABS on Thursday revised down its estimate of unemployment in March by 0.1 percentage point to 3.9 per cent.