Following Thursday’s ABS labour market release, CBA’s head of Australian economics, Gareth Aird, noted that border closures are helping to support Australia’s labour market recovery:
In recent years the Australian economy has needed to generate growth in employment of around 18ka month to keep the unemployment rate from rising. A decent rate of jobs growth was required each month because net overseas migration was strong and growth in the working age population averaged~27k a month.
The situation is very different now with the international borders closed. Growth in the working age population has averaged just 8k a month since April 2020. The international borders are unlikely to be reopened in any material sense until well into 2021, which means that monthly employment growth in excess of 6k will see the unemployment rate fall, notwithstanding any changes to participation (see chart opposite). We think that will be delivered comfortably in 2021 because we expect the Australian economic recovery to be strong…
We forecast solid employment growth in 2021 and expect the unemployment rate to be 5¾% by end-2021.
As we keep saying, restoring mass immigration will only worsen the unemployment queue and further depress wages, smashing Australia’s working class.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
