In its latest Statement on Monetary Policy, released on Friday (5 November), the RBA said forward-looking indicators of labour demand point to a strong recovery in the labour market over coming months.
"Timely data on job advertisements showed a strong increase in hiring intentions in New South Wales and Victoria from the latter half of September, ahead of the easing of lockdown restrictions. Hours worked also picked up in New South Wales in September. Liaison over recent months suggested that firms affected by lockdowns were reluctant to lay off staff given reported labour shortages and strong labour demand prior to the lockdowns," the bank said.
"Involuntary job turnover picked up sharply at the onset of the pandemic, and one in five people who left or lost their job over the year to February 2021 were retrenched."
By contrast, the number of people leaving their jobs for voluntary reasons declined at the start of the pandemic, consistent with workers delaying job changes in the face of heightened uncertainty. The Reserve Bank noted that turnover has picked up in recent months; unlike last year, the recent increase in people leaving their jobs was driven by voluntary reasons, with the most common reason being to get a better job or because they wanted a change.
"Strong underlying labour market conditions have also supported further increases in labour market participation over the past 18 months, notwithstanding the temporary effects of the recent lockdowns. Increases in participation by female workers reflects strength in industries that tend to have a higher share of female workers, such as health," the bank observed.
The RBA noted that labour force participation for older workers has also picked up from its level just prior to the pandemic, in contrast with the declines in participation observed in other advanced economies such as the US.