Australia's unemployment rate rose to 4.5 per cent in July, up from 4.4 per cent in June, as the Reserve Bank's grip on the labour market kept biting and the number of employed people fell by 15,800. The official figures, released with all the calm of a machine measuring human insecurity, showed unemployment increasing by 4,200 people and part-time work taking the biggest hit.
Who Pays for the Tight Labour Market
The people at the bottom paid first. July's employment data showed fewer jobs, more unemployment, and a labour market that keeps getting squeezed in the name of inflation control. The unemployment rate is now the highest in the post-COVID era, in trend terms. That matters because the pain isn't abstract. It lands in households, on rent, on groceries, on the daily arithmetic of getting by when work disappears or hours get cut.
David Bassanese, chief economist at BetaShares, said, "Along with slowing house prices, and the recent lower-than-expected June quarter inflation result, it's another reason to expect the RBA to remain benched at the upcoming late-September policy meeting." The language is polite, but the machinery is blunt. The central bank sits at the center of the decision-making, and workers sit underneath it, absorbing the consequences.
The Reserve Bank's most recent forecasts, published last week, expected the unemployment rate to reach 4.5 per cent by the end of this year, then keep rising over next year and hit 4.8 per cent by mid-2028. That's not a surprise to the people who lose shifts, lose income, or get pushed into under-employment while officials talk about balance.
What the Bank Calls Balance
RBA governor Michele Bullock said last week, "We need a little bit less tightness in the labour market in order to bring inflation down." That sentence does a lot of work for the institution. It turns unemployment into a policy instrument, a lever pulled from above so prices behave below. The people being squeezed don't get a vote in that arrangement.
Callam Pickering, Asia Pacific economist at Indeed, called the July employment data a "thoroughly mediocre jobs report" and said, "The unemployment rate continues to drift upwards and should rise further over the remainder of the year." He also said, "Recent labour market data, including both wage growth and the unemployment rate, have been weaker than expected. That's bad for workers and households, but also a sign that tighter monetary policy is having the desired impact. With recent data flows quite positive, at least from the RBA's perspective, we believe that another rate hike this year is now unlikely. However, it'd be a mistake to believe the hiking cycle is over."
That is the reform trap in plain sight. The same policy regime that weakens wages and raises unemployment gets praised for doing exactly what it was designed to do. Workers and households take the hit. The institution gets to call it success.
Slack, Under-Employment, and the People Left Hanging
Harry Ottley, CBA economist, said the under-employment rate had risen from 5.9 per cent in January to 6.4 per cent in July, and the under-utilisation rate had risen from 10.2 per cent to 10.8 per cent. Those numbers point to more than just joblessness. They show the spread of precarious work, the slow expansion of hours lost and income withheld.
Ottley said, "To be sure, the labour market is on a solid footing, is not weakening precipitately, and [it] likely remains on the tight side. And it is important not to over-interpret monthly moves," and added, "But in our view there is a noticeable trend of increasing slack in the labour market, bringing it closer to balance." He estimated that the so-called NAIRU, the unemployment rate that officials suspect may be consistent with inflation at target, was probably about 4.6 per cent.
He said, "In broad terms, the labour market does appear to be closer to balance than it has for some time."
Balance, in this vocabulary, means enough people out of work or under-employed to keep wages from rising too fast for the comfort of the central bank. The apparatus calls it stability. The people living through it call it a thinner paycheck, fewer hours, and another month of waiting for the market to decide who gets to eat.