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The Clarius Skills Indicator for the September quarter 2013 shows an oversupply of 134,000 job seekers in the Australian labour market. Compared with average historical experience, there are relatively more job seekers than job vacancies. This puts employers looking to secure the right candidate in a strong position.
In 2013 labour demand weakened. According to the report, this pushed unemployment up and vacancies down, creating a surplus of job seekers which rose steadily. The peak in the investment boom in mining passed, which saw labour demand in this sector weaken significantly. Labour demand did not improve in other parts of the economy, as business conditions remained weak.
The Clarius Skills Indicators now shows that the current surplus of jobseekers of 134,000 exceeds that seen in the global financial crisis (GFC), when there was a peak surplus of 90,000 jobseekers.
However this comparison needs to be understood in context. Firstly, the downturn in the Australian labour market during the GFC was mild by international standards. Secondly, the GFC downturn and the current downturn are both mild by Australia’s own historical standards, having avoided a recession. Thirdly, the latest data for vacancies and unemployment suggests that the labour market is beginning to stabilise.
Furthermore, the current surplus of job seekers is concentrated at the low skill end of the jobs market where labour demand has deteriorated the most. Employers who are trying to find the right low skilled candidate will often find recruiting relatively easy, while employers trying to find the right high skilled candidate will generally be finding it more difficult.
Looking ahead to 2014, finding the right candidate for a vacancy should remain easier than normal. Recruiting should be the least difficult in the March quarter 2014, when the surplus of jobseekers is expected to reach 143,000. From the June quarter of 2014, recruiting conditions are expected to slowly tighten and become balanced by 2016.
Labour demand in the private sector should improve as business conditions pick up spurred by lower interest rates, the recent depreciation in the Australian dollar and higher mining exports as new mines ramp up production. Partially offsetting this improvement will be weaker labour demand in the public sector as governments try to restore their fiscal health.
To read the full report, please click here.