Rising unemployment shows why interest rate hikes should be paused
Rising unemployment shows why interest rate hikes should be paused
During the month of January, the national unemployment rate increased from 3.5 percent to 3.7 percent, and the economy shed 11,500 jobs.
Jobs data from the Australian Bureau of Statistics for the month of January show that the participation rate went down by 0.1 percentage point, to 66.5%.
The head of labour statistics at the ABS, Bjorn Jarvis, stated that the unemployment rate has increased to 3.7% as a result of a decrease in employment of approximately 11,000 people and an increase in the number of unemployed of 22,000 people.
This was the second consecutive monthly decline in seasonally adjusted employment, but it followed very strong growth throughout the year 2022.
Due to the robust demand for workers, the unemployment rate has been consistently stable around the middle of the three percentile for the past six months.
With 14,600 jobs disappearing from the economy in December, the unemployment rate remained unchanged at 3.5 percent during that month.
The participation rate ended the year at 66.6 percent, a decrease of 0.2 percentage points from the previous month.
Economists and researchers anticipated another strong jobs report for the month of January. They forecasted that the economy would add another 20,000 jobs and that the unemployment rate would remain unchanged at 3.5 percent.
According to Mr. Jarvis, there was a larger-than-usual increase in the number of people who were unemployed over the course of the month, but there was also an increase in the number of people who have a job to go to in the future.
"January is the most seasonal time of the year in the Australian labour market, with people leaving jobs but also getting ready to start new jobs or return from leave," he said. "There are people leaving jobs but also getting ready to start new jobs or return from leave."
"During the month of January, we observed a greater number of people than is typical who were working and indicated that they would be beginning or returning to work later in the month,"
The fact that the unemployment rate has increased today is evidence that the RBA's recent and dramatic increases in interest rates are having a negative effect on employment and that these rate increases should be halted.
According to projections made by the RBA, the rate of unemployment will climb to 4.5% by the middle of 2024, which will result in an additional 150,000 people being unemployed.
ACOSS is concerned that tens of thousands, if not hundreds of thousands, more people will be out of work if the RBA continues to raise interest rates.
Cassandra Goldie, the CEO of the company, stated that the government can combat inflation by tackling price rises at their source rather than relying on the ineffective tool of increasing interest rates.
"Today we are seeing the real and harsh effects of rapidly rising interest rates, with 21,900 people losing their jobs. This is a direct result of the rise in interest rates." She said.
She said High inflation is a serious challenge that should be addressed; however, we require a more nuanced approach that prevents more people from being forced onto woefully inadequate income support.
"Right now is the time for the RBA to pause on interest rate rises and take stock while the government should kerb inflation directly by better regulating exorbitant rent and energy prices, and by strengthening the ACCC so that businesses can't take advantage of price rises to lift their profit margins." "Now is the time for the RBA to pause on interest rate rises and take stock."
Additionally, ACOSS is requesting that the government come to an understanding with the RBA regarding a formal full employment target (low unemployment and under-employment), and that the government give this target the same level of priority as the Bank's inflation target.
In a submission to the RBA Review, ACOSS calls for greater diversity in the composition of the RBA Board, including representation of people on the lowest incomes and those excluded from the labour market.
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