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Lowest unemployment fi gures for 13 years BUT they disguise a country divide
JODIE PATRON
THE latest ABS jobs data shows state variations, driven by the latest COVID-19 lockdowns which have again divided the economy.
Th is month:
Th ere were 36,000 fewer people employed in NSW (the only state to have fewer people employed currently compared to pre-pandemic March 2020); in contrast, there were 16,000 more people employed in Victoria, 11,000 more employed in SA and 6,000 more employed in WA.
Across the nation, there were 22,000 more males were employed, while there were 19,000 fewer females employed.
Today’s data suggests that the national labour market as a whole remains fairly strong. Th e unemployment rate fell further, sitt ing at 4.6 percent, the lowest it has been for 13 years.
Employment saw another increase, with 2,200 more people in a job compared to last month and the proportion of the population employed remaining close to its June high of 63 percent (dropping slightly to 62.9 percent).
But, scratching the surface shows this positive headline isn’t all it seems, and isn’t uniform across the economy. While overall employment remained strong, the number of people in the labour market fell, which accounted for most of the fall in unemployment. Notwithstanding this fall, the overall national participation rate is still sitt ing at a relatively strong 66 percent.
Hours worked were the key problem however, with NSW the problem area. Th e Sydney lockdown in July saw total hours worked across the Nation fall further, by 3.1 million hours. NSW hours fell by 7 percent or 40.5 million hours – off sett ing the gain in hours across the rest of Australia.
In NSW, over July, more than 600,000 people indicated that they worked fewer hours than usual as a result of ‘No work, not enough work available, stood down, or for other reasons not related to leave or bad weather’. Th ere were also an additional 90,000 people on leave compared to July last year.
Victoria, by contrast, was a bright spot. Following the signifi cant fall (1.8 percent or 39.6 million) in hours worked in June as a result of the Victorian lockdown, July’s rebound saw hours worked in Victoria more than recovering from its June slide.
Th ere were more than 270,000 less people indicating that they worked fewer hours than usual as a result of ‘No work, not enough work available, stood down, or for other reasons not related to leave or bad weather’ in Victoria in July compared to June. Th ere were also 24,000 less people on leave compared to July last year.
Underemployment was again a problem, deteriorating in July, reaching 8.3 percent, refl ecting the fall in hours worked and the eff ects of the lockdowns. Again, NSW was the problem area, with its underemployment fi gure rising to 9.3 percent, overshadowing the improvement in Victoria, where underemployment fell from 10.1 percent to 8.2 percent.
WA and Tasmania were the only other two states that saw an improvement in underemployment over the month.
Overall, there were 646,000 people in Australia who worked fewer hours than normal in July because they had no work or not enough work – 126,000 more than in June. Th ere were also around 190,000 more people on leave compared to July last year.
In conclusion, while we saw a strengthening economy in the June labour market data, the July data shows how quickly this can reverse when lockdowns are implemented across the nation.
Th e impacts of the more stringent lockdowns across Sydney, and the new lockdowns across the broader NSW state, and in many of the other states and territories, will come through in next month’s data release.
Yet there is still some positive context. Even with these ups and downs detailed in today’s fi gures, the Australian economy shows remarkable resilience in the face of challenges posed by lockdowns.
Despite lockdowns in our largest state, hours worked in July 2021 remained above Australia’s pre-pandemic fi gure in March 2020.
First published on KPMG Newsroom by Jodie Patron, Senior Economist, KPMG Australia on 19 August 2021.
Recession avoided as GDP takes a surprise upswing, but next quarter looks bleak
DR BRENDAN RYNNE
THE Australian economy continues to surprise on the upside, with GDP growth in the June quarter recording 0.7 percent – marginally higher than both KPMG estimates and market expectations.
A technical recession has been avoided, although the next quarter looks bleak, and the anticipated December quarter recovery is very dependent on the speed of lockdowns ending.
Household consumption (+$3.0 bn) and government spending ($1.3 bn) were the heroes of the June quarter, with these two categories alone driving more than half of the 1.7 percent uplift in domestic demand for the 3 months to June 2021.
Household consumption was boosted by strong income growth, especially for private sector employees, with people spending more and saving proportionately less than in the previous quarter. Current dollar compensation of employees in the private sector rose 1.5 percent compared to 0.7 percent for public sector workers – although over the year public sector workers saw their incomes grow by 4.5 percent compared to 2.9 percent for private sector employees.
On trade, exports fell by 2.3 percent and imports increased by 1.5 percent. Net exports came in at around $5bn, a marked change on the March fi gures where net exports totalled $10bn.
Th e June quarter data also allows a fuller picture of which industries performed the strongest over FY21 and which ones struggled. Th e sectors recording the strongest annual growth in industry gross value added were Agriculture (32 percent), Road Transport (8 percent), Forestry and Fishing (7 percent), Metal products (7 percent), Wholesale trade (7 percent), Healthcare (6 percent) and Retail Trade (6 percent). Agriculture benefi tt ed from about a 16 percent in rural commodity prices over the year.
Changes in consumer behaviour and spending patt erns due to COVID-induced lockdowns explain much of the growth around road transport, wholesale and retail trade and healthcare expenditures; while the growth in forestry and metal products can be ascribed to brought forward construction activity, associated with the HomeBuilder and Instant Asset Write-Off stimulus packages.
KPMG’s short-term economic outlook, however, is not so encouraging, with September quarter economic activity expected to decline in real terms by around -2.6 percent. Th e more positive news is that the December quarter should show resilience and bounce back – but this is highly dependent on the economy gradually reopening, given the increasing double vaccination rates.
Were this opening up of the economy not to occur, then the outlook would be less rosy. Economic growth in the December quarter could potentially be as much as onethird lower than KPMG’s current central case forecasts if restrictions are not eased in line with expected vaccination rates.
First published on KPMG Newsroom by Dr Brendan Rynne, Chief Economist, KPMG Australia on 1 September, 2021
A more pragmatic board room approach
GORDON ARCHIBALD
ORGANISATOPNS across the world have made strides in remote working and collaboration during the COVID-19 pandemic, but the proliferation of digitisation is creating significant new cyber threats that require radical cultural change at boardroom level.
In the Australian market, where speed is critical and regulatory and legislative requirements are increasing, cyber security teams play a critical role.
Cyber security teams are responsible for building trust, resilience and forging a pragmatic security culture and helping embed secure by design thinking into every aspect of digital infrastructure and data. To do this, they must be enablers and facilitators, helping others deliver services and brands that deserve cyber trust amongst customers, employees and society at large.
A new KPMG report, From enforcer to infl uencer: Shaping tomorrow’s security team calls on business leaders to ensure cyber security specialists are part of the C-suite decision making process, ensuring digitisation at the heart of their future growth strategies.
Here are seven key recommendations:
1. Act like you belong in the C-suite
Chief Information Security Offi cers (CISOs) must speak their language, building consensus, demonstrating pragmatism and navigating politics to help leaders understand the cyber implications of their strategic choices. CISOs are becoming public fi gures, serving as the face of the fi rm to help build trust and confi dence.
2. Broaden horizons
CISOs’ responsibilities are broadening to include safeguarding data, dealing with disruptive events to maintain operational resilience, managing third parties, handling regulatory compliance, and helping to counter cyber enabled fi nancial crime. Th is demands they forge strong working relationships with other leaders withing the organisation including the Chief Risk Offi cer (CRO), the Chief Data Offi cer (CDO) and, of course, the Chief Information Offi cer (CIO).
Today’s CISOs should be sophisticated communicators, working with other business leaders to embed cyber security into the DNA of the organisation. Th is involves integrating security into governance and management processes, education and awareness, plus establishing the right mix of corporate and personal incentives to do the right thing.
4. Shape the future cyber security workforce
CISOs will have to acquire capabilities from outside the organisation, build new partnerships and look for unconventional and diverse talent. In future, we may even see the cyber function becoming far smaller, taking on a strategic and governance role, with cyber security being truly embedded into the business. repeatable way. It can also help embed security and improve the user experience, as well as reduce the time to respond to a major cyber incident
6. Brace for further disruption
We are heading towards a hyperconnected world in which the IoT and 5G networking will massively increase effi ciency and enable radically diff erent business models. But this also opens organisations to new att ack surfaces and raises privacy concerns — demanding a shift to new, data-centric security models such as zero trust.
7. Strengthen the cyber security ecosystem
Organisations are now part of a complex ecosystem of suppliers and partners, tied together through shared data and shared services. Conventional contracts and liability models seem ill-suited to the rapidly evolving supply chain threat, calling for a new partnership approach that brings security to all parties and individuals.
CISOs must see themselves as enablers and facilitators, helping others deliver services and brands that deserve cyber trust among customers, employees and society at large. Th e digital world is part of everyone’s daily life; with the pandemic heightening its importance trust in the robustness and security of systems will make their role more visible and more important.
