The post-pandemic labour boom has washed away much of Australia’s long-term unemployment, with a 40 percent fall in four years.
A new Productivity Commission report, released today, said the number of long-term unemployed (out of work for more than a year) increased from 162,000 in March 2020 to peak at 244,000 a year later.
“As the economy recovered, this decreased to 132,000 by June 2022 and 100,000 more recently in February 2024 – almost 40 percent lower than pre pandemic levels,” the report said.
“As such, tight labour markets can support more inclusive economic growth by providing greater opportunities to people experiencing disadvantage.
“(This) can help people overcome significant ‘scarring’ associated with unemployment, improving their wellbeing over the longer term.”
The report, A snapshot of inequality in Australia, documented record declines in inequality across a broad range of social groups during the pandemic. However, during the recovery this trend was somewhat reversed.
“The initial pandemic period saw an unprecedented decline in income inequality,” Commissioner Catherine de Fontenay said.
“The incomes of lower-income households grew rapidly in relative terms in the early stages of the pandemic, due to the massive increase in support payments from the Government.
“Income inequality increased later in the pandemic period as the economy recovered and government support was phased out.”
Commissioner de Fontenay said government support during the pandemic allowed some low-income Australians to reduce debt. House prices increased during this period but the biggest increases were in regional areas where the prices were already relatively low.
The report found that, while older Australians had relatively low incomes compared to working age Australians, many had significant wealth they could draw on if necessary.
“When you look at wealth and income together, older Australians are doing better on average than younger Australians,” Commissioner de Fontenay said.
“We are seeing some improvements in the income gap between men and women consistent with an increase in women’s workforce participation and a declining gender pay gap.”
Men generally had more assets than women where these were owned individually, including superannuation and bank balances.
The gap between the average incomes of Aboriginal and Torres Strait Islander people and Australian average income narrowed slightly early in the pandemic before widening in 2022.
The full report is on the Productivity Commission website.
