In its latest minutes of the monetary policy meeting, the Reserve Bank of Australia flagged that the increase in participation by older workers meant Australia’s unemployment rate has remained steady.
“Members noted that the increase in participation by older workers had more than offset any tendency for the ageing of the population to reduce aggregate participation in the labour force,” it was reported.
The RBA considered that a combination of factors lead to the participation levels, which included slow income growth, improvements in health, and greater flexibility in the labour market.
Strong participation of women in the workforce also enabled unemployment to remain at the 5.3 per cent mark.
“Over the previous year, there had been a particularly notable increase in the participation rates of women aged between 25 and 54 years and workers aged 65 years and over,” it was said.
The commentary comes after the Australian Bureau of Statistics noted the steady rate, despite the creation of 41,000 new jobs.
At the time, ABS chief economist Bruce Hockman said this was due to the trend of participation increasing to 66.1 per cent of the Australian population.
What is required to lift real wages?
The Reserve Bank has previously stated that low wage growth will remain while there is spare capacity in the economy.
According to governor Philip Lowe, a change to capacity would require an almost 1 per cent reduction in unemployment.
“I suspect nationally we could sit around 4.5 per cent without seeing wage growth pick up,” Dr Lowe had stated.
nestegg previously reported that with Australians not optimistic about net wealth, jobs and income, the current wage environment is likely to see more Australians working until they are 75.
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