Economists warn that the unemployment rate could rise above 5 percent, with hundreds of individual job applications
Briefly:
ANZ is warning that the job market is about to deteriorate significantly.
Recruiters are reporting hundreds of applications for individual roles.
What is expected next?
The RBA will need to resolve the evidence on unemployment before its next meeting in August.
As the unemployment rate has been slowly rising, alarm bells are ringing about the potential for a large increase in unemployment.
When Sydney-based account manager Michael (not his real name) lost his job in August last year, aged 40, he started looking for work straight away.
“I was going through LinkedIn, Seek, looking for jobs,” he told PM.
“I also hired a job consultant.
“I spent over $1,000 for them to put together my resume, give me a cover letter.
“I paid them a little extra to get them fitted [material] for a very specific job I went for.
“I didn’t get an interview for that job … in fact, I didn’t even hear back from the recruiter.”
Michael has recently found more work, but it means taking a big pay cut.
“So I actually made a LinkedIn call to my network and said, you know, ‘most jobs come through networking, guys, I need your help,'” he said.
“And a friend came up to me and basically said I have a job, it’s yours if you want it.
“But it was a job that was designed for someone just a few years out of college … and it was the same salary I was making 25 years ago.”
Few roles, many applicants
A director at recruiter Robert Half, Nicole Gorton, told Premier that many more students, immigrants and ex-returnees are entering an already well-supplied job market.
This has made job hunting very competitive and Ms Gorton said their agency is now receiving hundreds of applications for each individual job opening.
“We can select from 200 to three,” she said.
“Our job is really to make that shortlist on behalf of an organization… and a lot of them are not suitable.
“Many of them do not have visas to work here … they may be from abroad … and maybe they have visas to work here and do not have the technical skills and / or the level of experience required for the job.”
And, Ms. Gorton warned, many firms prioritized internal candidates to fill roles.
“Companies are trying to promote internally, upskilling internally, as a retention strategy,” she said.
“So we’re seeing that this is first and foremost, before they go to market, so to speak.”
ANZ senior economist Blair Chapman warned the unemployment rate could soon rise sharply.
Crucially, Dr Chapman did not expect mass redundancies – rather, an influx of jobseekers without enough roles available.
“So they can get in and tend to get in [labour market] in unemployment and not in employment”, he told the prime minister.
“We’ve already seen that kind of percentage of people entering and ending up in unemployment is going up a little bit this year.
“And we can see that the job-finding rate can drop really quickly.”
Dr Chapman warned there was a risk Australia’s unemployment rate could peak above 5 per cent, well above current forecasts, by the end of next year.
The acceleration of the unemployment rate is a matter of time
The obvious question then is, why do official unemployment figures show a jobless rate of 4.1 per cent in June, which the ABS describes as “relatively tight”?
University of Canberra economist Leonora Risse said anecdotal evidence of harder and longer job searches often preceded rising unemployment.
“What you’re describing is moving from a 4 per cent unemployment rate to 4.1 per cent, and probably the longest it’s taking people to find a job,” she told the Prime Minister.
“There could be more research efforts.
“Unemployment is about matching workers with jobs that suit them.
“And so eventually, ideally, they’ll find that job match, but in the process of doing that there’s that time in between, absolutely — what we call search time and search cost.”
The “cost” to Michael is plain to see.
“I feel abandoned by society – especially when I hear on the news how unemployment is so low and anyone who wants a job can get one,” he said.
“I’m overqualified, I’m older than the people they’re hiring.
“I’m not necessarily ticking the boxes they want. The things I have don’t seem to be appreciated.
“I really don’t know how to process it.”
The Reserve Bank also needs to process official data and anecdotal evidence through its benchmarking program before making its next interest rate decision in early August.
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