Unemployment rate steady but millions of hours lost due to sick leave

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The unemployment rate remained steady in January at 4.2 per cent despite Omicron outbreaks leaving hundreds of thousands of workers off sick or isolating.

An extra 12,900 people were employed over the month, while the number of unemployed lifted by 5600, Australian Bureau of Statistics data released on Thursday morning shows. A big fall was seen in the number of hours worked over January, with a decline of 159 million as people fell sick, isolated as close contacts or took holidays.

The number of people taking sick leave in January ballooned in 2022.Credit:iStock

ABS head of labour statistics Bjorn Jarvis said the survey was taken during significant disruption due to Omicron.

“Last year, in January 2021, the large 4.9 per cent fall in hours worked mainly reflected more people than usual taking annual leave. At that time there were relatively low numbers of active cases of COVID and only localised impacts,” Mr Jarvis said.

“While we again saw higher than usual numbers of people taking annual leave – even more so than last year – the 8.8 per cent fall in hours worked in January 2022 also reflected much higher than usual numbers of people on sick leave.”

In NSW and Victoria the number of people working reduced hours due to sickness was three times the pre-pandemic average in January. In other states and territories it was double the usual number.

“Western Australia was the only jurisdiction with a usual low number of people working reduced hours in January because they were sick,” he said.

Typically 90,000 to 100,000 people are away sick for an entire week in January. This year about 450,000 people were off sick for a week, or about 3.4 per cent of the workforce.

“The January 2022 figures are also much higher than in the winter months in Australia, when sick leave has usually peaked in August at around 140,000 to 170,000 people,” he said.

The underemployment rate increased by 0.1 percentage points to 6.7 per cent, while the participation rate also lifted 0.1 percentage points to a historic high of 66.2 per cent.

The unemployment rate hit the 13-year low points of 4.2 per cent in December, but the labour market survey was taken before the worst of the Omicron outbreak had been experienced later in the month and in the new year.

The Commonwealth Bank was expecting national employment to rise by 45,000 jobs over January and the jobless rate to fall to 4 per cent, which would have been a 14-year low.

The Reserve Bank’s latest outlook forecast the jobless rate to hit 4 per cent in June, before falling to 3.75 per cent until 2024. The tight labour market is expected to contribute to wage growth, with the RBA waiting for inflation and wage rises to post several solid increases before lifting interest rates.

The National Skills Commission’s Internet Vacancy Index jumped to a 13-year high over January with almost 260,000 positions available and recruitment activity up about 41 per cent over the last 12 months.

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