National labour shortages have sparked a political fight between the government and the opposition despite unemployment sitting at a near 50 year low.
Subscribe now for unlimited access.
or signup to continue reading
Liberal spokeswoman for employment Michaelia Cash blasted the Albanese Government for not addressing existing labour constraints which has meant job vacancies now outweigh the number of unemployed people within the economy.
However, Employment Minister Tony Burke was quick to point blame at the Coalition, claiming it systematically kept wages low and are now seeing a fall in real terms due to surging inflation.
He noted the Coalition had left leaks in the systems which is why wages are not moving fast enough despite a tighter labour market.
"It's coming through in pipes that have all sorts of leaks coming out of them," he said.
"Leaks off the back of a previous government trying to drive wages down for 10 years. Leaks in terms of loopholes in the system that allow what were otherwise minimum rates of pay to be able to be undercut."
Labour figures for July show the unemployment rate fell to 3.4 per cent and is the lowest point the economic indicator has been since 1974.
In June it stood at 3.5 per cent.
Senator Cash urged the federal government to adopt a Liberal policy of expanding the hours retirees and veterans could work without having any tax implications.
"It is clear fewer Australians are out there looking for jobs and we are now in a position where businesses are having to close down because they can't get workers," she said.
"The Albanese government has got to do something immediately to give businesses the access to the workers they need."
EY chief economist Cherelle Murphy noted multi-year enterprise bargaining was a reason why wages were slower to lift.
"The nature of our wages system with multi-year enterprise bargaining agreements, means there will be some lag in the pick-up of wages growth, despite recent high inflation," Ms Murphy said.
"This lag is a risk to consumer spending, and ultimately economic growth, as households begin to tighten their belts in the face of rising inflation and interest rates."
Labour shortages are set to be addressed in September at the upcoming jobs and skills summit in Canberra next month, which will seek to find solutions to some of the economies ongoing structural problems.
The Australian Bureau of Statistics outlined the drop by about 20,000 unemployed people was due to a tighter labour market which is being driven by higher number of job vacancies and ongoing worker shortages.
The number of employed people fell by 0.3 per cent, or 41,000 people and is the first decrease since October 2021.
Participation fell from 66.8 per cent to 66.4 per cent from June to July, while underemployment decreased 0.1 per cent to 6 per cent.
ABS head of labour statistics Bjorn Jarvis said there were more job vacancies than people unemployed.
"In July, there were fewer unemployed people (474,000) than there were job vacancies (480,000 in May)," he said.
CommSec chief economist Craig James noted the tight labour conditions were likely to persist and claimed the lower levels could make the Reserve Bank's job at inflation control harder.
"It is possible that the jobless rate could fall to the early threes or even late twos," Mr James said.
"So the tight job market will continue to place upward pressure on wage costs and complicate inflation fighting by the Reserve Bank."
READ MORE:
Mr Jarvis noted hours worked over the month had dipped and attributed to annual and sick leave over the period.
"In addition to people taking annual leave around the winter school holidays, there were also around 750,000 people working fewer hours than usual due to being sick in July 2022, around double the usual number we see during the middle of winter," he said.
"Given the extent of sickness within the community during July, some people who were on annual leave over the school holidays may have also been sick or caring for others."
