A record number of West Australians are now employed, but the State still has the second-highest unemployment rate in the country.
A record 1,343,800 persons were in a job last month, in trend terms, after an extra 2,000 found work.
The size of WA’s labour force (which comprises the number of employed and unemployed persons) expanded by 2400 last month, another positive sign.
However, the State’s unemployment rate remained steady at 6.1 per cent – making it the second-highest in the country behind Tasmania’s 6.7 per cent.
The national unemployment rate is much lower, at 5.1 per cent.
One reason why WA’s unemployment rate remained steady last month, despite the State’s record-high employment, had to do with the so-called “participation rate”.
The participation rate, which measures the proportion of WA’s population who are working or looking for work, has been slowly shrinking for months.
It continued that slide last month, slipping to 67.9 per cent – the lowest since August 2017. It was 68.5 per cent in October.
WA’s Chamber of Commerce and Industry says there is a “direct link” between the State’s high unemployment and low wages growth – with WA recently recording the lowest quarterly wages rise of 0.3 per cent.
“If we want to see real wages growth in WA then we need to get more people into work by supporting small businesses, not impose ill-conceived policies such as a living wage on businesses that are already struggling to stay afloat, as proposed by the ACTU, Unions WA and Federal Labor,” CCI chief economist Rick Newnham said.
State Treasurer Ben Wyatt said there was good news for WA.
“Western Australia is again doing the heavy lifting of jobs creation in the country. The latest figures show that a quarter of the nation’s new jobs were created right here in WA,” he said.
“Importantly, most of the jobs created in WA have been largely full time and while there has been a decline across the country in full time work of 6,300, in WA we have seen an increase in 4700 full time jobs (in seasonally adjusted terms).
“This is good news for WA and further proof that the McGowan plan is working.”
Nationally, full-time employment fell slightly last month and underemployment rose sharply, to 8.3 per cent.
Sarah Hunter, the chief economist at BIS Oxford Economics, said that suggested there were still plenty of workers who would like to increase their hours but can’t, a sign of “considerable spare capacity” in the labour market.
But there are positives to take out of the national figures.
The number of jobs across Australia increased by 28,400 last month, the participation rate hit a record high 65.8 per cent (driven by a sharp lift in female participation to 61 per cent), and employment growth was running at 2.6 per cent a year (the strongest since June last year).
“The economy has created enough jobs over the past year to absorb the natural increase in the working age population and additional entrants to the labour market,” Commonwealth Bank economist Belinda Allen said.
Crucially, Australia’s record-high participation rate explains why the national unemployment rate has increased slightly - with the proportion of the population in work or looking for work rising, more people are officially being recognised as unemployed.
“It is a rise in the unemployment rate for a ‘good’ reason,” Alex Joiner, the chief economist of IFM Investors, tweeted on Thursday.
“The Reserve Bank’s dilemma [is] rising participation has undermined its ability to tighten labour markets and drive greater wages growth.
“Applying the 2013-16 average participation rate to what has occurred [recently] would have the unemployment rate at 3.7 per cent, not 5.2 per cent.”