Labour market update - February 2021

The February 2021 labour force data showed employment surged with 89,000 Australians finding work and the unemployment rate dropping sharply from 6.3% to 5.8%. The overall labour market is in a strong position heading into the end of JobKeeper this month.

This labour force survey takes in the 5-day lockdown in Perth and the start of Victoria’s 5-day lockdown.

Across Australia, around 96% of jobs lost or workers stood down in April 2020 have returned to work. This represents over 1.2 million Australians back at work. Total employment has recovered to its March 2020 level, with full-time employment up 0.2%, while part-time employment is 0.4% lower than March levels.

Over 876,000 jobs were recovered or created nationally since May 2020. Treasury estimates there are around 900,000 Australians supported by JobKeeper – around 7% of workers. JobKeeper will end on 28 March and data on the preliminary impact of this transition will likely first be available at the end of April. The impact of the end of JobKeeper is a key unknown for the labour market going forward.

Young people (aged 15-24) remain the most adversely affected cohort in the labour force, with 74,000 young people still out of work compared to March 2020. In contrast, there are 145,000 more people over 35 in employment than there were before the crisis. The national participation rate held steady in February at 66.1% – close to a record high.

Hours worked rose 6.1% in February – the biggest monthly rise on record. The number of Australians who worked fewer hours than usual rose slightly to around 550,000. People employed but not working any hours rose to almost 130,000 in February and is above its pre-crisis level. This largely reflects the impact of the Perth and Victorian lockdowns.

Growth in the labour force has been slow without growth from migration during COVID, growing at 0.8% over the year, substantially lower than the 2.1% growth over the year to February 2020. This has reduced the impact on the unemployment rate of slow labour demand growth over the last 12 months.

February Labour Force

Employment

Employment rose 89,000 between the first two weeks of January and the first two weeks of February, a 0.7% rise. Employment has risen in eight of the past nine months.

There are 3,600 more people employed compared to March 2020, only just under the record employment from February 2020.

  • The survey includes the 5-day Perth lockdown and the start of Victoria’s 5‑day lockdown.

Table 1: National impact of the crisis on the labour market

Category

March 2020

Peak/Nadir in 2020

February 2021

Employed (m)

13.0

12.1

(May)

13.0

Unemployed and looking for work (‘000)

716

1,008

(July)

805

Employed, not working any hours (‘000)

76

767

(April)

127

Left/joined the labour force since March (‘000)

-

-667

(May)

93

Fall in hours worked since March (%)

-

-10.4

(May)

-0.7

Unemployment rate (%)

5.2

7.5

(July)

5.8

Participation rate (%)

65.9

62.6

(May)

66.1

On JobKeeper (m)

 

3.6

(Aug)

0.9

On JobSeeker (m)

0.80

1.49

(May)

1.25

Youth Allowance other (‘000)^

93

174

(July)

138

^ Unemployment payment for people under 22
Source: ABS cat. no. 6202.0; Senate Select Committee on COVID-19 Answer to Question on Notice no. 99, 224; Senate Select Committee on COVID-19 Additional Information no. 56; Treasurer, Doorstop interview, Sydney Domestic Airport, 11 March 2021.

Youth employment (people aged 15‑24) grew 37,000 in February.

  • Around 74,000 young people have lost their job since March 2020.
  • This is largely because full-time employment for young people has not recovered from its fall in May 2020

Youth employment is still down 3.8% compared to March 2020, a larger drop than employment for 25-34 year olds (down 2.6%). There are 1.8% more people over 35 in employment than in March 2020.

  • Full-time employment has recovered and there are around 18,000 more people employed full-time than there were in March 2020.
  • There are around 15,000 fewer people working part-time than there were in March 2020.

Unemployment and participation

The unemployment rate dropped from 6.3% in January to 5.8% in February.

The number of people who are unemployed dropped by 70,000 in February taking the total number of people who are unemployed down to 805,000. 

  • There are still 89,000 more unemployed people than there were at the start of the crisis.

The participation rate held steady at 66.1% in February.

  • The participation rate is 0.2 of a percentage point above the March 2020 level.

Around 19,000 people joined the labour force in February.

  • The labour force is still above its pre‑crisis level, with 93,000 more people working or looking for work compared to March 2020.

The youth unemployment rate dropped to 12.9% in February from 14.0% in January, despite the participation rate increasing by 0.3 of a percentage point to 68.6%.

  • Around 6,000 young people joined the labour force in February.
  • The youth labour force is still down 52,000 compared to March 2020.
  • Youth unemployment fell by almost 23,000 in February.
  • The youth participation rate is just above its pre-pandemic level.

Hours worked

Hours worked had the largest monthly rise on record, up 6.1% in February 2021. Hours worked are now down just 0.7% compared to the start of the crisis.

  • The drop in January partly reflects more people than usual taking leave and the restrictions triggered by the Northern Beaches outbreak and the Brisbane lockdown.

Employment to population ratio

The employment to population ratio rose to 62.3% in February. The ratio is down just 0.2 of a percentage point compared to March 2020.

Underemployment

The underemployment rate rose to 8.5% in February 2021, roughly on par with its pre‑crisis level.

There are 29,000 fewer people reporting they are underemployed than in March 2020.