At an address to the Anika Foundation on 21 July, RBA governor Philip Lowe said this is because many of the people who lost their jobs over recent times have been classified as not in the labour force and so are not counted as unemployed.
“As the labour market continues to improve, we expect many of these people will start looking for jobs, and thus be classified as re-joining the labour force,” Mr Lowe said.
“This will push up the measured unemployment rate at the same time that the share of the working-age population with a job is also rising.
“We saw an example of that in the figures for June, released last week, when despite employment increasing by a record 210,000 people, the unemployment rate also rose to 7.4 per cent, a 21-year high.”
Mr Lowe noted some businesses have also used recent months to reconsider their revenue models.
“In some cases, this is because of the decline in demand that is likely to persist, but for others, there has been a reassessment of how they manage their workforce. Some firms have identified new opportunities and there has been plenty of innovation,” he said.
“Yet despite this, restructuring and the uncertainty about future demand is likely to weigh on the labour market as it recovers.”
Mr Lowe said the path ahead is expected to be bumpy and there are some major challenges in the labour market.
Despite these challenges, he also said Australia “turned the corner” in June with regard to employment and hours worked, with hours worked increasing by 4 per cent and the number of employed people rising by 210,000.
“On the positive side of the ledger, many firms that were heavily affected by the shutdowns are now rehiring and lifting hours as the restrictions are eased in most of the country,” Mr Lowe said.
“This is most clearly evident in the retail, hospitality, and arts and recreation sectors. Some other firms have also hired large numbers of people as they respond to the increase in demand as a result of the pandemic. The supermarkets are a good example of this.”