Hours worked plunge nearly 9% as unemployment holds steady

By Jon Bragg

February 18 2022
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Aussies collectively worked 159 million fewer hours in January compared to December.

Hours worked plunge nearly 9% as unemployment holds steady

The latest data from the Australian Bureau of Statistics placed the unemployment rate at a steady 4.2 per cent in January.

However, the number of monthly hours worked dropped by 8.8 per cent or 159 million hours, as workers increasingly took sick leave and annual leave.

ABS head of labour statistics Bjorn Jarvis revealed that 450,000 people, or around 3.4 per cent of the total workforce, took a full week off in January due to illness, significantly higher than the pre-pandemic average of between 90,000 and 100,000 people.

“Last year, in January 2021, the large 4.9 per cent fall in hours worked mainly reflected more people than usual taking annual leave. At that time there were relatively low numbers of active cases of COVID and only localised impacts,” Mr Jarvis said.

“While we again saw higher than usual numbers of people taking annual leave – even more so than last year – the 8.8 per cent fall in hours worked in January 2022 also reflected much higher than usual numbers of people on sick leave.”

The number of workers who worked reduced hours due to illness was about three times above pre-pandemic levels in NSW, Victoria and across Australia and two times higher in the other states and territories.

Meanwhile, employment in January increased by 12,900 people compared to December, while 5,600 people joined the unemployed.

“As with earlier rapid changes in the labour market during the pandemic, hours continue to be much more affected than employment. This reflects people working reduced or no hours, without necessarily losing their jobs,” explained Mr Jarvis.

Responding to the ABS data, Prime Minister Scott Morrison praised the government’s economic plan for creating jobs.

“Under our government, over 1.75 million jobs have been created, including over 1 million jobs for women. We continue to lead Australia’s strong recovery from this pandemic,” he said.

Looking ahead, VanEck head of investments and capital markets Russel Chesler said that the unemployment rate would continue to drop in the coming months.

“We would expect it to fall below 4 per cent over 2022 as economic activity normalises and confidence returns to consumers and businesses,” he said.

“However, as COVID-19 lingers, labour shortages are likely to worsen as we are seeing more people stay at home with COVID-19 infections. The reality is that this is likely to be a key feature of the labour market in 2022.”

The Reserve Bank currently expects unemployment to fall to 3.75 per cent by the end of the year.

Offering his thoughts, CreditorWatch chief economist Harley Dale said that labour market performance remained a “shining economic light” but warned that businesses still face a number of challenges that could impact the labour market.

“This result represents a very positive economic update, but the devil in the detail will be when the ABS releases the industry labour force data next week,” he said.

“If labour force data can remain resilient and strong then that is a great sign for the Australian economy in 2022. If the encroaching return to ‘normality’ for hundreds of thousands of businesses gathers pace, then labour force updates may falter.”

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