Economists are warning unemployment rates could go through the roof if 'labour hoarding' is proven among Australian firms.
Economists have warned Australia could soon be heading toward a recession.An investment bank says Australia's unemployment rate would be much higher without so-called 'labour hoarding'.Economists say if labour hoarding is widespread among Australian firms, unemployment could spike alongside lower economic growth.Federal Treasury , the Reserve Bank , and many economists have Australia's unemployment rate peaking at 4.5 per cent.
But international investment firm Deutsche Bank says this forecast ignores a fundamental, and highly unusual, development in Australia's labour market that has the potential to shape Australia's economic future. "This is unusual — the phenomenon has been entirely absent in Canada's recent labour market slowdown, but not unprecedented: it has happened twice before in Australia over the past 50 years," Mr Odonoghoe said.
And, in saying that, it makes, from the RBA's point of view, Deutsche Bank's analysis largely redundant. "If it turns out that more firms are currently hoarding labour, then we may expect to see a larger pick-up in the unemployment rate as firms reduce headcount to cut costs given the backdrop of weak growth in demand."
She told the ABC the confusion around the extent of labour hoarding arises due to there being no official definition or metric around the practice.
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