The latest employment outlook from the OECD reveals that real wages in Australia are still 4.8% below their pre-pandemic levels, marking one of the largest drops among OECD countries. Despite this setback, the OECD Employment Outlook 2024 highlights the resilience of Australia’s labour market, showcasing several positive developments amid slight increases in unemployment rates and economic slowdowns.
As of May 2024, Australia’s unemployment rate has risen slightly to 4%, up from 3.6% in May 2023. However, the overall labour market remains robust. The labour force participation rate among the working-age population (15-64) increased by 1.8 percentage points from pre-COVID-19 levels to the first quarter of 2024.
Additionally, the employment rate rose by 2.7 percentage points over the same period. Youth employment has seen significant gains, with the employment rate for those aged 15-24 increasing by 3.9 percentage points, reflecting strong engagement of young people in the labour market.
Despite the projected economic slowdown in 2024, Australia’s labour market is expected to remain tight. The unemployment rate is anticipated to rise slightly to 4.3% by the fourth quarter of 2025. The growth in unit labour costs is contributing to relatively high inflation for labour-intensive services.
In response to persistent skill and labour shortages, the Australian government is set to overhaul its visa programme. The new Skills in Demand Visa, replacing the Temporary Skill Shortage Visa, will be implemented by the end of 2024.
This new visa aims to provide more flexibility for visa holders to change employers and offers a clearer pathway to permanent residency. The system will target specialist, core, and essential skills, incentivising employers to attract and retain skilled workers.
While real wages in Australia remain 4.8% below pre-pandemic levels, there has been some recovery. Real wages grew in 2024 for the first time in nearly three years, but Australian households continue to face significant cost-of-living pressures.
The real minimum wage in Australia saw a modest increase of 2.3% from May 2019 to May 2024, below the median OECD average of 8.3%. In contrast, the nominal minimum wage rose by 22.7% over the same period. As of July 1, 2024, the Fair Work Commission has announced a 3.75% increase in the National Minimum Wage and minimum award wages, impacting most employees across the country.
The transition to net-zero emissions by 2050 is expected to have significant implications for Australia’s labour market. As industries adjust to greener practices, there will be a need for upskilling and reskilling workers to meet new demands. This transition presents both challenges and opportunities for workers and employers alike.
With the introduction of the Skills in Demand Visa and efforts to address real wage growth, the country is poised to navigate its labour market challenges while transitioning to a sustainable, net-zero future.
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