Guy Debelle: The state of the labour market
The views expressed in this speech are those of the speaker and not the view of the BIS.
Over the past year, there have been welcome developments in the Australian labour market. Employment has grown strongly, the participation rate is close to its highest level on record and the unemployment rate has declined to be at a six-year low. This is consistent with the above-trend GDP growth in the economy. Despite these improvements, there is still spare capacity in the labour market. Unemployment is higher than is desirable and a number of workers would like to work more hours than are currently on offer. This is a large part of the explanation for the low wages growth in recent years. As detailed in our most recent Statement on Monetary Policy, we anticipate that GDP will continue to grow above trend over the next few years, which will see the unemployment rate decline further. This in turn should see wages growth pick up, providing a welcome boost to household incomes.