Large initial adverse impact on the labour force
In late March 2020, Australia introduced widespread social distancing and other business-related and travel restrictions to slow the spread of the COVID-19 pandemic. These measures included the shutdown of non-essential industries, which had large labour market effects.
Following these restrictions, the number of employed people aged 15 and over (seasonally adjusted) fell by 592,100 between March and April 2020 – by far the largest monthly fall in employment since the current Labour Force series began in February 1978. It dropped by a further 264,800 in May 2020 (Figure 1).
Labour force recovers within 12 months
After May 2020, employment increased every month to July 2021, except for a fall of 45,600 in September 2020 and another fall of 30,700 in April 2021 (Figure 1). By May 2021, there was an additional 130,400 employed people than in March 2020, with employment continuing to increase to June 2021 (29,100 more employed people than in May 2021). In July 2021, employment increased by 0.02% or by 2,200 employed people. Nationally, hours worked fell by 0.2% between June and July 2021.
This slower growth in July 2021 was influenced by the labour market changes in NSW due to the COVID-related lockdowns in Greater Sydney in early-mid July (reference period for the July data fell during the second and third week of the lockdown). In NSW, between June and July 2021, there were falls in employment (36,000 fewer employed people) and unemployment (27,000 fewer unemployed) with the labour force reducing by around 64,000 people. In addition, total hours worked fell by 7.0% in NSW and were 5.1% lower than March 2021 (ABS 2021a).
Despite this slower growth in July 2021, the labour market had recovered by early 2021 as observed in the employment, unemployment and underemployment seasonally adjusted rates as now described and shown in Figure 1.
The seasonally adjusted employment rate for those aged 15–64 fell from 74.4% in March 2020 to 69.7% in May 2020, and then steadily increased, reaching 75% each month from March (74.8%) to May 2021 (75.5%), and increasing further to 75.7% in June and July 2021. The rate in July 2021 not only exceeded the previous high level in March 2020, but also reached its highest level since the current labour force commenced in February 1978.
The seasonally adjusted unemployment rate for the population aged 15 and over rose steeply from 5.3% in March 2020 to 7.4% in June and July 2020 (highest level in 22 years) before gradually declining to 5.7% in March 2021 and further to 4.9% in June 2021 and 4.6% in July 2021. The unemployment rate in July 2021 was lower than what it was in March 2020 (before the COVID-19 restrictions) and was at its lowest rate since November 2008. The fall in the unemployment rate from June to July 2021 may reflect some people dropping out of the labour force as they give up the search for work.
The seasonally adjusted underemployment rate increased from 8.8% in March 2020 to a peak of 13.6% in April 2020. It gradually declined to 8.0% in March 2021, falling further to 7.4% in May 2021, and then rose in June 2021 (7.9%) and July 2021 (8.3%). The rate in July 2021 is still below the level before the COVID-19 restrictions. The peak of 13.6% recorded in April 2020 was the highest on record and almost twice as high as the rate observed over the average of the previous 20-year period (7.3%).
Labour force participation rate
The seasonally adjusted labour force participation rate (proportion of the population aged 15–64 who are employed or unemployed) fell from 78.7% in March 2020 to a low of 75.1% in May 2020. By May 2021, it had recovered to above March 2020 levels (79.6%); it continued to increase to June 2021 (79.7%) and then fell slightly in July 2021 (79.5%). This fall represents 37,700 fewer people in the labour force than in June 2021 (ABS 2021e).
The seasonally adjusted underutilisation rate (proportion of the labour force population who are unemployed or underemployed) increased from 14.1% to 20.0% between March and April 2020, and then gradually declined to 13.6% in March 2021 and 12.9% in July 2021, below the level observed in March 2020 (ABS 2021e).
Additional measure to assess employment impacts: effective unemployment rate
Additional measures were developed during the COVID-19 period to assess unemployment and loss of work. One such composite measure was the ‘effective unemployment rate’, developed by the Department of the Treasury. This measure includes unemployed people, those who have recently withdrawn from the labour force and those still connected to their employer but working zero hours.
The effective unemployment rate peaked at around 15% in April 2020; it then fell to around 14% in May 2020 and then to 11% in June 2020, as pandemic restrictions started to ease and employment increased, with fewer people working zero hours (Kennedy 2020).
Large initial decline in monthly hours worked
Another way to look at employment trends is to focus on monthly hours worked. This is important as people on the JobKeeper Payment were counted as employed even if working zero hours.
Between March and April 2020, seasonally adjusted monthly hours worked fell by almost 10%, but have since risen almost every month from April 2020 to May 2021. Hours worked in May 2021 were 2.8% higher than hours worked in March 2020. This increase in hours worked did not continue into June and July 2021, reflecting the recent COVID-19 outbreaks in Victoria in June and Greater Sydney in July. Nationally, hours worked declined by 1.8% between May and June 2021 and 0.2% between June and July 2021, influenced by the large fall in hours worked in NSW (7.0% decline) and recovery of hours worked in Victoria (9.7%) in July 2021. Despite these falls, hours worked in June and July 2021 were still above (0.9% and 0.7% higher) March 2020 levels (ABS 2021b).
The number of people who worked zero hours for economic reasons rose steeply between March and April 2020 (a 10-fold increase from 76,400 to 766,800), and then declined in most months through to May 2021, remaining relatively stable between March and May 2021 (between 56,700 to 58,800). The number of people who worked zero hours for economic reasons has since increased in June and July 2021, with almost 3 times as many people working zero hours (156,500 in June and 181,500 In July) as in May 2021 (58,200) and similar to the high levels observed in July and October 2020. This reflects the labour market impacts of continued COVID-19 outbreaks in Sydney and Victoria in June and July 2021 (ABS 2021b: Chart 6).
Labour force outcomes worse for young people and females
Young people and females (at least initially) were particularly affected by the labour market impacts associated with the COVID-19 restrictions, as these people were more likely to work in those occupations and industries most affected by the shutdowns and spatial distancing measures imposed to slow the spread of COVID-19 (see Figure 2 and ABS 2021d).
The 15–24 age group recorded the largest drop in employment rates (proportion of the age group who are employed), falling from 60% to 50% between March and May 2020, the lowest rate since the Labour Force series began in 1978. This was the largest fall of all age groups over this period, followed by that for the 25–34 age group (from 81% to 76%); all other age groups had a fall of 2–3 percentage points. By May 2021, employment rates for all age groups were above March 2020 levels (62% for those aged 15–24), except the 45–54 age group where employment rates were similar.
The 15–24 age group recorded the highest (seasonally adjusted) unemployment rate in over 2 decades, increasing from 11.6% in March 2020 to a peak of 16.4% in July 2020, the highest rate since February 1997. It then generally declined and by May 2021 was 10.7%, which equates to 24,800 fewer unemployed young people than in March 2020. The unemployment rate for the 25–34 age group also rose steeply between March and June 2020 (from 4.7% to 7.6%) before falling to 4.6% by May 2021. All other age groups had a slower relative growth in unemployment rates between March and June 2020.
The 15–24 age group had the highest (seasonally adjusted) underemployment rate since the current Labour Force series began in February 1978, increasing from 19.2% in March 2020 to a peak of 23.6% in April 2020, before falling to 15.8% in May 2021, below the level observed in March 2020 level and similar to the level in May 2014. Other age groups also saw a large increase in the underemployment rate between March and April 2020 (7.3% to 14.1% for those aged 25–34 and 6.3% to 10.6% for those aged 35–44), but, by May 2021, had also dropped to below March 2020 levels.
Male employment and unemployment rates did not recover as quickly as female rates (See Figure 2 and ABS 2021e). Female employment fell at a much faster rate than male employment early in the pandemic but recovered faster:
- Between March and May 2020, the number of employed females (seasonally adjusted) fell by 7.7% compared with 5.6% for males; however, the number of employed females increased at a faster rate than for males between June 2020 and May 2021 (a 7.4% and 4.9% increase, respectively).
- By May 2021, 97,500 more females were employed than in March 2020 (1.6% higher) and, equivalently, 32,600 more males (0.5% higher). The seasonally adjusted employment rate (for those aged 15–64) in May 2021 was 72.0% for females and 79.1% for males. Between May and July 2021, the female employment rate (15–64) had dropped by 0.1 percentage point (71.9%) while male employment had risen by 0.5 percentage points (79.6%).
In terms of unemployment (seasonally adjusted):
- between March and April 2020, the number of unemployed males rose at a faster rate (22% increase) than the number of unemployed females (11% increase)
- by May 2021, the number of unemployed females was below pre-pandemic levels (23,900 fewer unemployed females than in March 2020) and male unemployment had returned to March 2020 levels
- the female unemployment rate increased from 5.2% to a peak of 7.5% between March and July 2020 and then fell to 5.4% in March 2021 and further to 4.7% in May 2021. The corresponding rates for males were 5.4%, 7.4%, 6.0% and 5.4%, respectively.
For more information on the impact of COVID-19 on employment, see ‘Chapter 4, The impacts of COVID-19 on employment and income support in Australia’ in Australia’s welfare 2021: data insights.
The term ‘casual work’ is used to describe a large variety of work arrangements, and typically includes employees who do not tend to have leave entitlements (such as paid sick leave or annual leave). Such entitlements are usually for non-casual or permanent employees (ABS 2020c). Note that in March 2021, a specific definition for casual work was introduced (see Fair Work Ombudsman 2021 for more details). However, data presented in this section are based on currently available data from the ABS LFS on employees without leave entitlements that are used as a measure of casual employment.
The share of all employees employed on a casual basis in Australia grew from the late 1980s to the early 2000s (28% in August 2003) but remained relatively steady in the 6 years to February 2020 (around 24–25%). It fell to 20.6% in May 2020, the lowest rate since August 1991 (ABS 2020c). By May 2021, this share had risen to 23.7%, almost the same level as in February 2020 (24.1%; ABS 2021c: Table 13).
Casually employed workers accounted for nearly two-thirds (63%) of the job losses between February and May 2020 (ABS 2020a). Over this period, the number of casual employees fell by 21% (540,600 fewer casual employees) compared with a 2.6% drop (or 216,700 fewer) in employees not casually employed (that is, those with leave entitlements). From May 2020, the number of casually employed workers steadily increased, from 2.1 million to 2.6 million by May 2021, slightly below the numbers seen in February 2020 (25,300 fewer).
Retail and accommodation, and food services industries – among the hardest hit by social distancing measures during the COVID-19 pandemic – account for a large proportion of casual workers across Australia (Parliamentary Library 2020).
Since the current series of employment data collection began in the late 1970s, those aged 15–24 and those aged 55–64 have had lower employment rates than those aged 25–54. This is due to those in younger and older age groups transitioning into and out of work. Notably however, those aged 15–24 had higher underutilisation rates (unemployed or underemployed) than other age groups.
In May 2021, those aged 15–24 had the:
- lowest employment rate – 62% compared with 66% for the 55–64 age group and 83% for the 25–54 age group
- highest unemployment rate – 10.7% compared with 4.1% for the 25–54 age group and 4.0% for 55–64 age group
- highest underemployment rate – 15.8% compared with 5.9% for the 25–54 age group and 6.1% for the 55–64 age group (Figure 2).
Youth employment is tied closely with the engagement that young people have with other activities, such as education and training.
For a detailed picture of youth engagement, see Engagement in education or employment of Australia’s youth.
In May 2021, both the seasonally adjusted employment and labour force participation rates for the population aged 15–64 were lower for females than males –employment rates of 72.0% and 79.1%, respectively, and labour force participation rates of 75.6% and 83.6% respectively (Figure 2). Over the last 30 years, however, the employment and labour force participation of females have been rising and are currently at record levels (see Trends in labour force measures for further details).
The overall underutilisation rate (those unemployed or underemployed) for the population aged 15 and over was higher for females than males – 13.4% compared with 11.7% in May 2021. However, the unemployment rate was higher for males than females (5.4% compared with 4.7%) while the underemployment rate was higher for females than males (8.7% compared with 6.3%; Figure 2).
See ‘Chapter 4, The impacts of COVID-19 on employment and income support in Australia’ in Australia’s welfare 2021: data insights for more details.