Scott Morrison calls it a “once-in-a-lifetime opportunity” and Philip Lowe says it would be a “historic milestone”.
Remarkably, the Prime Minister and Reserve Bank of Australia governor are on the cusp of realising anunemployment rate with a 3 in front of it –the lowest in half a century.
Such a feat would have been dismissed as fantasy when the COVID-19 pandemic hit and the national economy shut down two years ago.
The goal of the lowest jobless rate since the ’70s will help determine the professional success and legacy of Morrison and Lowe, both of whom have faced criticism in recent months.
The strongest jobs market in half a century – with the prospect of more than 300,000 extra people in work than before the pandemic – will influence Morrison’s re-election chances at a presumed May federal poll.
The RBA is deliberately trying to run the economy hot and give greater priority than usual to achieve its full-employment mandate.
Pandemic measures
Rather than lifting interest rates in the expectation of higher inflation and rising wages, the RBA is prepared to be patient before moving up rates from near-zero.
For Lowe, who has 18 months remaining as governor, achieving the lowest jobless rate possible while keeping a lid on inflation would be a fitting end to a more-than-four-decade central banking career.
It is a high wire act and an unprecedented experiment in central banking, with potential generational consequences for millions of Australians.
The closure of the international border before it reopened in December to foreign students and workers has contributed to the current low 4.2 per cent jobless rate and skills shortages for business.
But the biggest drivers of the labour market’s strength according to Lowe and market economists have been the government’s massive $300 billion debt-funded stimulus, and the RBA’s easy money policies.
Full employment would mean jobs for more than 13 million people, increased working hours for part-timers and higher incomes.
For the civic-minded RBA governor, the trifecta of full employment, price stability and the prosperity of the Australian people would be a big economic and social dividend.
Nevertheless, there are big risks for both the governor and prime minister.
Globalinflation forces have leaked into Australia, pushing up the cost of petrol, food and home building costs near an election.
The RBA’s official 0.1 per cent interest rate is poised to rise, “plausibly” later this year, or in 2023,Lowe revealed in a backflipthis week.
Borrowers who bet big on Lowe’s earlier 2024 guidance on interest rate rises will face higher interest repayments sooner, and other cost-of-living pressures.
https://www.news.com.au/finance/work/at-work/shifted-expectations-1-in-5-aussies-quit-their-jobs-in-the-last-year/news-story/c289705577b26ab61b0cad3c0a6cd68a
