Full employment definition at heart of white paper

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Defining full employment will be at the heart of the Albanese government’s white paper as a debate rages over whether job losses are good for the economy during near-record-low unemployment.

The federal government has committed to delivering full employment as one of five key objectives in the employment road map, to be released on Monday, which it will use to inform intersecting policies including migration and education to bolster the economy amid a global skills race.

Treasurer Jim Chalmers says more needs to be done to “put the benefits of employment within reach of more of our people”.Credit: Alex Ellinghausen

“[The white paper] outlines our vision for a more dynamic and inclusive labour market in which more people have opportunities for secure, fairly paid work in a country where workers, employers and communities can be beneficiaries of change and thrive,” Treasurer Jim Chalmers said ahead of its release.

The other four key objectives are promoting job security and strong, sustainable wage growth; productivity growth; filling skills gaps; and overcoming barriers to employment faced by many Australians.

The definition of full employment has been central to the economic debate about managing inflation. The Reserve Bank has admitted its interest rate increases over the past year will inevitably lead to a lift in the jobless rate, which remained at 3.7 per cent for a second consecutive month in August.

New Reserve Bank governor Michele Bullock raised the ire of unions in June when she said the unemployment rate would need to rise to 4.5 per cent to help bring down inflation to the bank’s target range of 2 to 3 per cent.

The central bank considers an unemployment rate of 4.5 per cent could be the level that does not cause inflation to increase, which many economists consider to be full employment.

Australian Council of Trade Unions secretary Sally McManus said at the time the central bank had tolerated an overly high rate of unemployment in the past, suggesting the drivers of inflation needed to be properly identified. “Forcing up unemployment is not the answer,” McManus said.

Chalmers told ABC’s Insiders program in July said there was ongoing debate among economists about what constituted full employment, including “whether it’s around 4.5 per cent or a little bit lower than that”.

Billionaire property developer Tim Gurner was widely criticised last week for suggesting the unemployment rate needed to increase by 40 to 50 per cent to improve productivity, before walking back his comments.

The treasurer said on Tuesday that low unemployment positioned the country well to face up to slowing economic growth, “but more needs to be done to shape the future direction of our labour market and put the benefits of employment within reach of more of our people”.

The government has previously highlighted that many Australians with disabilities were able to work but were not being sought out in the jobs market.

The opportunities and challenges presented by Australia’s post-pandemic migration surge, including how to capitalise on the returning cohort of international students in areas where the country is lacking in vital skills, will also be part of the white paper’s discussions.

The policy areas the white paper will probe include overhauling the vocational education and training sector, and modernising parts of the economy, including through the shift from fossil fuels to renewable energy.

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