We can and should keep unemployment below 4%, says our survey of top economists

The median (middle) response was higher, but still below official estimates – an unemployment rate of 4%.

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The ConversationThe Conversation
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https://theconversation.com/we-can-and-should-keep-unemployment-below-4-says-our-survey-of-top-economists-211277https://theconversation.com/we-can-and-should-keep-unemployment-below-4-says-our-survey-of-top-economists-211277
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Sunday, August 13, 2023
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Unemployment, Employment, Royal Economic Society, University, Social security in Australia, Area studies, NAIRU, Policy, Reserve Bank of Australia, Julia Gillard, OECD, Center, Economic Society of Australia, Government, Scardinius, Treasury, Labour, Dependent and independent variables, Climate change, Reserve Bank, Uranium mining, Employment agency, Ridesharing, Renewable energy, Cryptocurrency, Tutoring, Industry
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AUSTRALIA
Summary
Key Points: 
  • The median (middle) response was higher, but still below official estimates – an unemployment rate of 4%.
  • Significantly, only two of the economists surveyed picked an unemployment rate of 5% or higher, which is where Australia’s unemployment rate has been for most of the past five decades.
  • Australia’s unemployment rate dived to 3.5% in mid-2022 and has remained close to that long-term low since.
  • Geopolitical events and climate change have probably pushed up the rate of inflation to be expected from any given domestic unemployment rate.

3.5% unemployment, yet falling inflation

    • Craig Emerson, a former minister in the Rudd and Gillard governments, said NAIRU was best described as the lowest unemployment rate consistent with inflation not taking off.
    • Given Australia’s inflation rate is now coming down, NAIRU is clearly below the present unemployment rate of 3.5%, he argued.
    • This is the case at present, suggesting “full employment” means an unemployment rate of 3.5%.

Fix education, job-matching and childcare

    • There was very little support for cutting immigration or the JobSeeker payment.
    • The unemployed who would benefit the most would be those further down the queue who were the least successful in finding jobs.
    • Another, Brian Dollery from the University of New England, said much of Australia’s unemployment had been generated by unemployment benefits that were too high.
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