Regional Australian Labour Markets Are Bigger And Better Than Ever
In May 2023, the participation rate in regional Australia hit 64.54% - the highest rate on record (as per ABS statistics). To put it another way, combined with the growing labour force and low unemployment rate - at no point in Australia’s history have more people worked in regional Australia. As of this quarter, 4.98m people are employed throughout our regions.
All key labour market indicators point in one direction: employment is growing strongly, the unemployment rate is near record lows, and the participation rate is the highest ever.
Likewise, the differences between regional and metropolitan indicators point to a favourable regional story: regional Australia has a lower unemployment rate, much stronger growth in online job advertisements, and the gap between metropolitan and regional participation rates appears to be reversing. The June 2023 Internet Vacancy Index shows online job advertisements in regional Australia were 4.1% higher than in June 2022 – much of which driven by the booming demand for professional workers. Arts and Recreational Services, as well as the Construction industry also continued to experience strong employment growth. In contrast, job vacancies in metropolitan regions fell by 9.8% over the same period.
So, will this goldilocks growth ever end? Unfortunately (or fortunately depending on your point of view), there are limits to the rates of growth: the unemployment rate cannot go to zero, the participation rate cannot realistically reach 100% (and nor should it), and migration is restricted by housing availability. Given that the needles on these indicators are pointed toward the extreme, we suggest that that growth rates have well and truly peaked. There are also headwinds for the economy evident in some key indicators: metropolitan job advertisements have declined, business confidence is mixed, and the interest rate rises are still working their way through the economy - although in a welcome reprieve for mortgage holders, the reserve bank decided to leave the cash rate at 4.1% for August. Whatever challenges may lie ahead, both globally and domestically, regional Australia stands on solid ground and is well placed for continued prosperity.
| Jump in monthly job vacancies
Source: National Skills Commission, Regional Australia Institute
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Regional and metro Australia unemployment rates
Source: National Skills Commission, Regional Australia Institute
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The regional labour force continues to grow
Regional Australia’s labour force (employed plus unemployed) reached 5 million people in late 2022 and continues to storm ahead, currently sitting at 5,126,000. Over the last 12 months, an average of 13,000 people joined the regional labour force every month and it is growing at one of the fastest rates in history.
| Regional Australia labour force - size
Source: ABS Labour Force (detailed), RAI
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Regional Australia labour force - annual growth
Source: ABS Labour Force (detailed), RAI
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Regional participation hits its highest rate ever!
In May 2023, the regional participation rate hit 64.54% - the highest rate in history. As shown in the labour force figures above, more people than ever are employed in regional Australia. This rate, however, is still not as high as it could be. The metropolitan participation rate is 68.5%, 4.4 percentage points higher than the regional rate: a gap that has been steadily widening over the past two decades. Much of this widening gap has been due to population increases in idyllic regional retirement regions – such as the Gold and Sunshine coasts. However, the latest data indicates this trend may be reversing, or has at least paused, as younger people move to the regions in response to the booming job market and quality of life.
Regional Australia Participation Rate
Source: ABS Labour Force (detailed), RAI
Unemployment
After a brief pause last quarter, the employment rate continued its strong post-pandemic surge downward. As of June 2023, the regional unemployment rate was 3.2%, lower than the metropolitan rate of 3.4% and the national average of 3.3%. It remains a job-seekers market, with regional employers reporting hiring difficulties – particularly for certain skillsets – most notably professionals. The National Skills Commissions’ Internet Vacancy Index shows a boom in the number of online job advertisements for professional workers. Advertised demand for technicians and tradespersons has softened recently – most likely a result of interest rate rises which continue to work their way through the economy, as well as spiralling construction costs causing a rethink of many construction projects. However, it is worth noting that the construction industry continues to normalise after an unprecedent boom following the HomeBuilder program.
Regional and metro Australia unemployment rates
Source: ABS Labour Force (detailed), RAI
Regional Labour Demand
Regional job vacancies dip to 87,200 in June
In June 2023, almost 87,200 regional jobs were advertised, representing a 4.3% drop from the number of vacancies in May. Despite being lower than the previous month, this latest figure signifies a 4.1% increase year-over-year, indicating that the demand for regional labour remains strong. This annual growth pattern in regional Australia stands in contrast to the situation in metro Australia, where job advertisements have declined by 9.8% compared to the previous year.
Regional Australia job vacancies
Source: ABS Labour Force (detailed), RAI
Only one region saw a small monthly increase in job ads in June 2023, which was:
- Yorke Peninsula & Clare Valley up by 0.5% (353 compared to 352)
Looking at the annual figures, the latest advertised vacancies are still well in excess of what was being advertised a year earlier in most regions. The metropolitan regions did not fair so well, with only Adelaide experiencing any annual growth. The rates of annual growth in vacancies across the various regions are diverse, ranging from around 1.1% to 38.7%.
The five regions with the biggest jumps in vacancies in June 2023 compared with June 2022 were:
- Yorke Peninsula & Clare Valley up by 38.7%
- Central Queensland up by 26.0%
- North West Tasmania up by 21.8%
- Toowoomba and South West QLD up by 20.2%
- Wimmera & Western up by 15.2%
In terms of the occupations being demanded, vacancies are largest for Professional roles (28%) of all vacancies in April, followed by Technicians and Trades roles (15%), Community and Personal Service roles (13%) and Clerical and Administrative roles (13%).
Additional regional labour market indicators:
Employment growth is strong – with all but one state seeing strong annual labour force growth on last year
At the state level, employment growth for the quarter was strong, with all states either growing or holding employment levels relatively steady. Regional South Australia was the strongest performer with a 4.3% increase over the February quarter, with Queensland seeing the second largest quarterly growth of 2.2%. New South Wales, Victoria, and Tasmania all sat between 1-2% growth. Western Australia (-0.6%), the Northern Territory (-0.6%) and the ACT (0.6%) all maintained roughly similar employment levels with last quarter.
Annual growth figures were even more impressive, with all but states but Western Australia (-2.2%) showing solid employment growth – ranging from 2.5% to 9.4%. South Australia (9.4%), Victoria (7.6%) and the ACT (6.2%) all showed exceptionally strong employment growth.
However closer examination of the sub-regions clearly shows the diversity amongst labour markets. Whilst Western Australia as a whole declined in employment levels, the Wheat Belt region was amongst the top five regions with the strongest improvement in unemployment and job growth – essentially halving unemployment since last year.
Nine SA4 regions have incredibly low unemployment rates - below 2%, eight of which are in NSW and Victoria, plus Toowoomba in Queensland.
Five SA4 regions with the largest annual fall in unemployment rates
Source: ABS Labour Force (detailed), National Skills Commission, Regional Australia Institute
Regional Employment By Industry – Levels And Growth
Regional employment continued to edge its way toward reaching 5 million people - currently sitting at 4.98 million people as of May 2023 – a 4.3% growth on last year. This employment growth is exceeding previous expectations and official forecasts, with regional employment expected to reach 5 million people by Christmas.
The Construction and logistics industries (Wholesale Trade; and Transportation, Postal and Warehousing) continued their strong growth in employment and were responsible for much of the jobs gains this quarter. Collectively they created over 95,000 jobs in regional Australia over the last year, 54,000 of which occurred over the most recent quarter.
Arts and Recreational Services, although a small component of formal employment, continued to add impressive job numbers – adding 19,000 jobs to regional Australia over the last year, and 3,000 over the last quarter. Arts and Recreational Services has consistently been a strong source of new jobs post-pandemic and this growth is expected to continue for the foreseeable future.
| Regional employment by industry May qtr 2023 (000s) |
Regional employment by industry annual change, May qtr 2023 (%) |
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SOURCES The Internet Vacancy Index is updated monthly by the Department of Education Skills, Employment and Business (https://labourmarketinsights.gov.au/our-research/internet-vacancy-index/). The RAI has an interactive Regional Job Vacancy map of the data showing vacancies in 37 regions across Australia (regionalaustralia.org.au/home/regional-jobs-vacancy-map).