Will Australian job advertisements continue to recover in 2022?

Highlights

• Australia could see a drastic rise in employment levels in 2022 if job ads continue to increase.
• The unemployment rate rose in October following lockdown restrictions across major towns and cities.
• The opening of international borders could work in favour of jobs in the travel and tourism sector.

During the initial wave of COVID-19, job openings plunged considerably, prompting a dramatic loss in labour market activity. Fast forward to the end of 2021; a lot has changed, with job openings showing an extravagant recovery. Though the growth momentum may change in 2022, market experts remain hopeful about the existing labour market conditions.

The data from Australia and New Zealand Banking Group Limited (ASX:ANZ) reveals that job ads recorded an increase of 7.4 per cent in November 2021 on a month-on-month basis. The easing of COVID-19 lockdown measures saw demand for labour spike in Melbourne and Sydney, inducing a rise in job advertisements. Interestingly, job advertisements also demonstrated decent growth in October, rising by 6.2 per cent.

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Will the unemployment rate decline?

Rising jobs listings are a gauge of the profitability of businesses. As companies see growing revenues, they expand their operations and hire a greater number of workers onboard. An increasing job availability should ideally be succeeded by an improvement in the employment rate.

For Australia, this could mean a sharp turnaround in the unemployment rate, continuing the observed downward trend. Unemployment rate declined to 4.6% in November this year, as per the Australian Bureau of Statistics (ABS). The latest figures from ANZ suggests that Australian job advertisements increased in November, in line with economic recovery.

While some increase in job openings was an expected outcome of lockdowns being lifted, a massive rise of 44 per cent in job listings over pre-pandemic levels came as a pleasant surprise. Experts have embraced the latest job ads report as an indicator of an ongoing revival in the labour market.

Now, it will be interesting to see how soon the unemployment rate responds to improving labour market conditions. However, the recent outbreak of the Omicron variant could not be neglected, which could derail the country’s economic recovery from the pandemic.

Will Australian job advertisements continue to recover in 2022?

What to expect in 2022?

The recent report from ANZ suggests that job ads rose by 16.9 per cent in New South Wales, 15.2 per cent in Victoria and 12.5 per cent in the Australian Capital Territory in November. With some states already demonstrating strong recovery, one can expect improved employment across Melbourne and Sydney in the coming months.

The latest findings suggest that Australian workers might gain higher leveraging power in the labour market. As the competition among industries rises, employers might be willing to offer higher compensation to workers, increasing the overall wages in the economy. Additionally, workers might also get a chance to choose from a set of alternatives instead of settling for a position for which they are overqualified.

According to National Australia Bank, job advertisements soared by 7 per cent in the hospitality and tourism sector alone through the month to November 2021. Although the tourism sector has borne the heavy brunt of the pandemic, the improvement in job advertisements has given a sigh of relief. With the opening of international order, further job ads could be expected in the travel sector. But the situation is not the same for all sectors.

On closer inspection, the reason for this disparity in job positions and the availability of workers became more apparent. A high number of people quit their jobs in the previous year due to mobility restrictions. Consequently, the lack of adequate or skilled workers can be felt across various industries, leading to such disparity.

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Bottom Line

Speculations are rife that the unemployment rate could fall below 5 per cent in the short run and 4.5 per cent by June 2022. If market forces remain favourable, the unemployment rate could further decline in 2023. This is especially significant for an economy like Australia, where the central bank is using ultra-low interest rates to drive down the jobless rate to 4 per cent.

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