Understanding the trends in unemployment is crucial for analysing the economic health of a country. Unemployment trends provide insights into the effectiveness of economic policies, the impact of global events, and structural changes in the labour market. In Australia, the unemployment rate has experienced various fluctuations due to different economic conditions over the past decade.

Key Trends and Events

Post-GFC Recovery (2010-2019)

During the GFC, unlike many developed economies, Australia avoided a technical recession. As a result, unemployment levels were not drastically affected and remained low by international standards. However, although the rise was small, the economy still saw unemployment increase to 5.9%.

After the global financial crisis, Australia's unemployment rate stabilised as the government implemented various measures to stimulate the economy. Infrastructure projects, tax incentives, and support for small businesses helped maintain employment levels. For example, the National Broadband Network (NBN) project, initiated during this period, created numerous jobs in construction and technology sectors, contributing to economic stability.

However, across the decade between 2010 to 2019, Australia's unemployment rate still fluctuated between 5-6%. This is above the NAIRU, which essentially states that a viable unemployment rate should be held at around 4.5%. This consistently higher rate can be attributed to the slowdown in the mining sector and structural changes in the manufacturing industry. The transition towards a service-based economy required workforce retraining and adjustments.

COVID-19 Pandemic (2020-2021)

The pandemic caused a sharp increase in the unemployment rate as businesses closed and economic activity plummeted. This increase saw the Australian unemployment rate peak at 7.4% in July 2020. In response to this, the government responded with significant fiscal measures to support workers and businesses. For example, the JobKeeper program, introduced in 2020, provided wage subsidies to keep employees on payrolls, helping to mitigate the rise in unemployment. This combined with almost $314 billion in fiscal spending by the Australian Government, allowed for a rapid recovery post-pandemic.

Post-Pandemic Recovery (2021-2022)

During the post-pandemic recovery of 2021-2022, the Reserve Bank of Australia maintained a record low cash rate of 0.10% and engaged in quantitative easing to support economic recovery. The Australian government implemented significant fiscal measures, including the $90 billion JobKeeper Payment to retain employees, enhanced JobSeeker unemployment benefits, the $2.5 billion HomeBuilder program, and accelerated infrastructure investments. These measures led to a decrease in the unemployment rate from 7.5% in July 2020 to around 4.2% by December 2022.

Current Australian Economy (2022-2024)

During 2022-2024, the Australian economy experienced significant improvements. By October 2022, unemployment reached historic lows of 3.4%, maintaining a steady rate between 3.5-3.7% in early 2023. This period of low unemployment reflects the continued effectiveness of monetary and fiscal policies implemented during the post-pandemic recovery, which supported job creation and economic stability. However, an unemployment rate below the NAIRU is not always beneficial to an economy. It can result in increased inflationary pressure and labour shortages, which has been evident in the post-COVID Australian economy.

The Challenges of Australian Unemployment

The Australian government has ultimately failed to keep the economy's unemployment rate at the NAIRU for almost the last 15 years. As shown in the graph below, the Australian unemployment rate has not consistently stayed at a rate around 4.5% between 2010 and 2023.

The Australian economy's inability to stabilise unemployment can be attributed to the following challenges which are still being addressed:

Current Australian Unemployment Statistics

As of April 2023: