A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

Joel Robinson

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.

In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.

The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.

The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments

The site currently comprises three commercial properties.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" />

The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.

The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" />

A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.

Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.

Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.

First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

<a href="https://www.apartments.com.au/new-apartments/otium-parkdale-123-125-como-parade-east-parkdale-vic-3195">Otium Parkdale</a>, the 13-residence boutique development by&nbsp;<a href="https://www.apartments.com.au/developers/huxtable-property">Huxtable Property</a>, has entered its final stages of delivery, with completion expected within the coming month and more than half of the residences sold.

The Como Parade East project is nearing the finish line at a time when opportunities to purchase new apartments in <a href="https://www.apartments.com.au/developments/parkdale-vic-3195">Parkdale</a> remain exceptionally limited. Fewer than 10 per cent of dwellings in the bayside suburb are apartments, making developments like Otium a relatively rare addition to a market traditionally dominated by detached housing.

[smartcode_project:default project_id=134974 project_image_fid=5427]

The three-level development comprises 13 residences, including ten two-bedroom apartments and three larger three-bedroom homes, all positioned above a secure basement car park.

Designed by <a href="https://www.apartments.com.au/architects/almeida-architects">Almeida Architects</a> with a strong connection to its coastal surroundings, Otium combines red brick, exposed concrete and dark metal detailing with integrated landscaping and greenery. Expansive glazing, generous balconies and terraces have been incorporated throughout the design to maximise natural light and reinforce indoor-outdoor living.

Inside, the residences feature engineered European oak flooring, natural and reconstituted stone benchtops, Bosch kitchen appliances, ducted heating and cooling, lift access and secure entry systems. The larger three-bedroom residences on the upper level have been designed with house-like proportions, while the two-bedroom apartments prioritise functionality, flexibility and low-maintenance living.

[smartcode_project:default project_id=134974 project_image_fid=5421]

The project is now in its final stages, with <a href="https://www.apartments.com.au/builders/labco">Labco</a> completing the remaining landscaping and external finishing works following the completion of the residences' interiors.

Otium's location within the heart of Parkdale continues to underpin its appeal. Residents will be just steps from local cafés, restaurants, shops and the newly elevated Parkdale Station, while the beach is less than a kilometre away.

With the project tracking ahead of schedule, buyers can currently secure a residence with a five per cent deposit and benefit from settlement terms of up to eight months. The advanced stage of construction also provides buyers with the opportunity to walk through the near-complete residences and experience the quality and finishes firsthand ahead of completion.

[smartcode_project_cta:default project_id=134974]

Otium Parkdale enters final month before completion as rare apartment opportunity nears sellout

A new boutique apartment development is entering the market in <a href="https://www.apartments.com.au/developments/chermside-qld-4032">Chermside</a>, with Brisbane-based developer <a href="https://www.apartments.com.au/developers/ausdev">Ausdev</a> bringing 33 residences to a well-connected pocket of Brisbane's north.

<a href="https://www.apartments.com.au/new-apartments/parkdrive-apartments-chermside-25-sammells-drive-chermside-qld-4032">Parkdrive Apartments</a>, at 25 Sammells Drive, will comprise a mix of one- and two-bedroom residences positioned within walking distance of Westfield Chermside, The Prince Charles Hospital, and Bradbury Park.

Established in 1989, Ausdev has a long-standing presence across both development and construction, with Parkdrive Apartments representing its latest residential project in Brisbane's northern suburbs.

[smartcode_project:default project_id=152125 project_image_fid=363778]

The development has been designed around open-plan living and natural light, with residences featuring stone benchtops, timber cabinetry, BOSCH appliances, and private balconies that extend the living areas outdoors.

Kitchens are positioned as the centrepiece of the homes, incorporating natural material palettes and integrated appliances, while bathrooms have been designed with a focus on functionality and understated finishes.

Residents will have access to a communal barbecue and entertaining area on Level 3, providing shared outdoor space within the development. Secure parking and lift access are also incorporated into the building.

The project will deliver a limited collection of 33 apartments, with one-bedroom residences priced from $749,000.

[smartcode_project:default project_id=152125 project_image_fid=363782]

Beyond the building itself, the location places residents within easy reach of several of Chermside's key amenities. Bradbury Park is around 350 metres away, while Westfield Chermside is approximately 1.3 kilometres from the site. The Prince Charles Hospital is located within 750 metres, and the Chermside Bus Interchange is around 1.5 kilometres away, providing connections across Brisbane.

Parkdrive Apartments adds to the growing residential pipeline in Chermside, a suburb that continues to evolve as a major retail, healthcare, and transport hub for Brisbane's north.

[smartcode_project_cta:default project_id=152125]

Ausdev introduces boutique Parkdrive Apartments to Chermside's growing centre

<a href="https://www.apartments.com.au/developers/skymark-group">Skymark</a>'s boutique Cronulla development Solis has secured a 10-year Latent Defects Insurance policy through Resilience Insurance, providing buyers of the 16-residence building on Ewos Parade with structural and waterproofing protection that extends a decade beyond the building's completion.

Currently under construction and due for completion in late 2027, <a href="https://www.apartments.com.au/new-apartments/solis-cronulla-8-ewos-parade-cronulla-nsw-2230">Solis</a> is one of a small number of new developments in the Sutherland Shire to carry Resilience LDI coverage, a distinction that carries increasing weight as buyer confidence in the off-the-plan sector continues to be shaped by how developers stand behind their product.

Latent Defects Insurance, which entered the Australian market in 2022 when Resilience Insurance was approved to offer the cover, protects buyers against major structural or waterproofing defects for ten years post-completion. Unlike traditional statutory warranties, it operates as a first-resort policy, if a covered defect arises, the insurer responds directly, without the buyer needing to pursue the builder or developer through a lengthy claims process.

Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.

"The overarching feedback from prospective buyers in the new development space is that they want more confidence and assurances around the quality of the build," Nugent says.

"Resilience Insurance Latent Defects Insurance not only gives them complete peace of mind for 10 years, but it shows the developer they are buying from is standing by their product."

[smartcode_project:default project_id=150499 project_image_fid=370898]

For Solis, the Resilience LDI policy adds a meaningful layer of accountability to an already considered project. The development comprises nine two-bedroom and seven three-bedroom residences, including one dual-level three-bedroom apartment, across a five-storey building on Ewos Parade, positioned between Shelly Beach and South Cronulla.

Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;

All 16 residences include at least one balcony or courtyard, and select apartments on the upper floors feature bar areas and secondary flexible living spaces.

Hiba Sander, Managing Director of Skymark, says Solis offers a rare balance, nestled between the quiet beauty of secluded beaches and the lively charm of South Cronulla's esplanade.

"It's a place to choose your pace and live gracefully, seaside'," Sander says.

[smartcode_project:default project_id=150499 project_image_fid=370900]

The architecture, designed by <a href="https://www.apartments.com.au/architects/ida-design-group">IDA Design Group</a>'s Michael Trinh, draws from the natural erosion patterns of <a href="https://www.apartments.com.au/developments/cronulla-nsw-2230">Cronulla</a>'s sandstone headlands, translating the organic forms of the coastline into soft curves, pavilion-style massing, and a material palette chosen for longevity in a salt-tinged environment.&nbsp;

Textured natural stone, soft renders, and timber-look battens reference the tones of the surrounding cliffs, while the building has been oriented to maximise natural light and passive ventilation, with primary living spaces facing north and east to capture morning sun and sea breezes.

"At Solis, our aim was to create architecture that feels quietly confident, grounded in natural materials like stone and timber, and elevated by light and landscape," Trinh says.&nbsp;

"The buildings are designed to sit gently within their coastal surrounds, with expansive glazing and abundant greenery creating a seamless dialogue between inside and out."

[smartcode_project:default project_id=150499 project_image_fid=370897]

Interiors by <a href="https://www.apartments.com.au/architects/hot-black">Hot Black</a> carry the same material language through to every room. Kitchens feature integrated Gaggenau appliances, sculpted stone benchtops, and Lo &amp; Co joinery, while bathrooms feature natural stone, timber, and brushed metal finishes.&nbsp;

Hot Black Founder and Design Director Sophie Safrin describes the intent as one of considered restraint: "At Solis, every detail has been thoughtfully considered to create a timeless coastal retreat, calm, refined, and effortlessly liveable. From natural finishes to seamless indoor-outdoor flow, Solis offers a quiet elegance that's deeply connected to its surroundings.

The landscape, designed by Julian Brady of <a href="https://www.apartments.com.au/landscape-architect/sitedesignstudios">Site Design Studios</a>, treats green space as an integral part of the resident experience rather than an afterthought.&nbsp;

"Gentle curves and layered native plantings mirror the ebb and flow of the ocean," Julian Brady says, "creating a serene connection between architecture and place."&nbsp;

Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.

[smartcode_project:default project_id=150499 project_image_fid=370899]

Skymark has an established track record in the Sutherland Shire, with a portfolio spanning Cronulla, Woolooware and Burraneer that includes Isla, Sylva, Bask, Shells, Sula and Mist. Securing LDI on Solis reflects a broader shift in how the developer is positioning its buildings to buyers, at a time when Resilience Insurance expects the policy to become mandatory in New South Wales by 2028.

Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.

[smartcode_project_cta:default project_id=150499]

Skymark takes out 10-year Resilience Insurance LDI at Solis Cronulla

Employment

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EXPERT OBSERVER
February Labour Force Survey: Total employment: 4.6k from 38.3k (revised from 39.1k), unemployment rate: 4.9% from 5.0% (unrevised 5.0%), participation rate: 65.6% from 65.7% (unrevised 65.7%).
Employment growth slowed in February lifting 4.6k less than what the market was looking for (median +15k) but a touch better than Westpac’s forecast of –5k. So far 2019 has had a sound start for the labour market with a three month average gain of 21.1k/per month. 
Through 2018 total employment grew 274.5k, or 2.2%yr, with a solid momentum into year end with a six month annualised pace of 2.3%yr. 
While it is just second month into the year, employment grew 284k in the year to February (2.3%yr) but the six month annualised pace has moderated from 2.9%yr in January to 2.3%yr in February.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%201.jpg" alt="">
 
Source: Westpac
As highlighted in our preview we are very cautious about making too much of the January/February releases given the large underlying seasonality in these months. However, what we can say is that it does appear that the momentum in employment has slowed. 
As such, there is nothing in this release to make us change our view that employment growth will take a breather through the first half of 2019 leading to a lift in unemployment. But, to be fair, the fall in the unemployment rate to 4.9% also means that at this point in time, the RBA will also feel little pressure to change their forecast for the unemployment rate to fall to 4¾%.
 It will all come down to who is the better forecaster.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%202.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%202.jpg" alt="">
 
Source: Westpac
In February, in reverse to the January result, the mix of employment gains painted a soft picture with a 7.3k loss in full-time employment offset by an 11.9k gain in part-time employment. However, hours worked was a bit more upbeat in the month with total hours worked up 0.2% (total employment was flat in the month) as hours worked per person gained 0.1% due to average hours worked rising for both full-time and part-time employees. 
In the year to February total hours worked has lifted 2.2%yr which is on par with the 2.3%yr pace for employment.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%203.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%203.jpg" alt="">
 
Source: Westpac
Despite the soft print on employment, the unemployment rate fell to 4.9% (market median was 5.0%) as a 0.1ppt decline in the participation rate to 65.6% (65.57% at two decimal places) resulted in a –7.1k decline in the labour force. At this stage it appears that both male and female participation is levelling out in a trend sense and we are closely watching where they go next. We do expect both to edge lower though 2019 H1 as employment growth stalls.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%204.jpg" target="_blank">Click here </a>to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%204.jpg" alt="">
 
Source: Westpac
February was a soft month for employment growth across the states. Employment fell 5.8k in NSW (+128.9k in the year) and the unemployment rate lifted to 4.3% from 3.9% which was a 30 year low in unemployment for that state. In Victoria, employment lifted 5.7k (+136.7k in the year) but with a lift in participation, the unemployment rate lifted to 4.8% from 4.6%. 
Queensland employment lifted in February 6.4k (+20.4k in the year) but a decline in participation saw the unemployment rate dip to 5.4% from 6.1%. In WA employment rose 2.8k (+7.7k in the year) with the 1ppt fall in unemployment to 5.9% being supported by a 0.6ppt fall in participation. Meanwhile in SA a lift in employment 3.8k (–0.1k in the year) in February saw the unemployment rate ease back 0.6ppt to 5.7%.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%205.jpg" target="_blank">Click here </a>to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%205.jpg" alt="">
Source: Westpac
Overall, while the annual pace of employment growth has picked up in Victoria, and eased back in NSW, NSW can still claim the mantle of having the lowest unemployment rate.
 Victoria was the state showing the greatest improvement through 2018 with the unemployment rate down 2ppts to 4.2% in December while in NSW unemployment fell just 0.5ppts to 4.3%.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%206.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%206.jpg" alt="">
Source: Westpac
We are closely watching how these trends continue through 2019 – NSW did surprise in January by dipping below 4%, but it has since bounced back to 4.3%, while Victoria’s improvement does look to be cooling with the unemployment rate holding above 4.5%.
It is these two states, and how their labour markets will respond to falling house prices, a contraction in construction activity and weak retail sales, that is behind our expectation for the unemployment rate to rise through the first half of this year. While we are cautious about interpreting too much from the January/February releases, we see nothing in them that makes us nervous about our forecasts.
It is also worth noting that in 2018, for all the strength in the labour market, the underemployment rate only declined 0.2ppt. So far there has been a further improvement with the rate falling from 8.3% in December to 8.1% in February. Again, we would caution that so far we have only see the January and February prints, so would not project that this improvement can be sustained, but nevertheless, it is another indicator of just how robust the labour market was at the end of 2018.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/employment%207.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/21/employment%207.jpg" alt="">
Source: Westpac
For 2019, we are looking for a pause in the pace in employment growth due to the economic uncertainties surrounding the Federal Election at the same time as we expect to see a moderation in momentum in NSW and Victoria on the back of a moderation in housing activity. With reasonable estimates for the participation rate, our weaker jobs growth profile has the unemployment rate lifting to 5.5% in the second half of 2019 and further by end 2020.
JUSTIN SMIRK is ‎a senior economist for Westpac 
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j.ballantyne1990-6AQqhLzZaK

Australian employment saw a February pause: Justin Smirk

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GUEST OBSERVATION
Total employment lifted a very solid 39.1k in January well clear of the market median of 15k and a market forecast high of 27k. The year has started with a solid trend pace of employment growth with a three month average gain of 31.9k. In the year to December total employment grew 268.5k, or 2.2%yr, with a solid momentum into year end with a six month annualised pace of 2.2%yr. While it is just one month into the year, employment grew 271k in the year to January (2.2%yr) with a very solid 2.9%yr six month annualised pace.
There is, however, an important caveat for the January Labour Force Survey – January is the peak holiday month in Australia as Christmas, New Year and school summer vacation all come together. As such it is the month where little happens in Australia and economic activity stalls. In original terms total employment fell –234.5k in January (an average of –263.9k in the previous three years) so we are always cautious about reading too much into a January print.
The mix of employment gains also painted a very solid picture with a +65.4k gain in full-time employment only partially offset by a –26.3k loss in part-time employment. In the month total hours worked rose 0.4% (total employment rose 0.3%) as hours worked per person gained 0.1%. In the year to January total hours worked has lifted 3.2%yr which is a robust pace compared to the 2.2%yr pace for employment.
Despite the strong gain in employment, the unemployment rate was flat at 5.0% (market median was for 5.0%) as a 0.1ppt lift in the participation rate to 65.7% (65.72% at two decimal places) boosted the gain in the labour force to 45.7k.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/21/unemployment%201%20.jpg" alt="">
Source: Westpac
As 2019 starts, NSW picks up the mantle as the state with the strongest labour market. In the month, employment lifted 47.2k (161.6k in the year), unemployment fell to 3.9% (a new record low) and confirming this is a strong print (rather than a soft unemployment rate due to declining participation) NSW employment to population ratio has also hit a new record high of 62.6%.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/21/state%20employment%20.jpg" alt="">
Source: Westpac
In January Victoria continued to make gains (2.2k/114.2k in the year) but it was a different story in the other states. Queensland employment pulled back (–19.9k/5.6k in the year) while employment was flat in WA (0.8k/0.9k in the year) and fell in SA (–4.5k/1.6k in the year).
Victorian unemployment did lift in the month (4.5% from 4.2%) allowing NSW to clearly reclaim the mantle of having the lowest unemployment rate.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/21/unemployment%202.jpg" alt="">
Source: Westpac 
Victoria was the state showing the greatest improvement through 2018 with the unemployment rate down almost 2ppts to 4.2% in December while in NSW unemployment fell just –0.5ppts to 4.3%. The Qld labour market appears to have stalled with the unemployment rate lifting 0.1ppt to 6.1% while it has been flat in SA at 5.9% and lifted in WA from 5.8% to 6.4%.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/21/unemployment%203.jpg" alt="">
Source: Westpac 
We are closely watching how these trends continue through 2019 – NSW has surprised us by dipping below 4% while Victoria’s improvement looks to have stalled. Will this shift through the first half of 2019? How will these labour markets respond to falling house prices, a contraction in construction activity and weak retail sales. Our expectation is for the unemployment rate to rise in NSW and Victoria. 
It is also worth noting that 2018 produced a –0.2ppt decline in the underemployment rate from Q1 to Q4. In January there was a further improvement in underemployment to 8.2% (from 8.3%) the lowest print in underemployment since March 2015. Again we would caution that this is a January print so would not project that this improvement can be sustained but nevertheless, it is another indicator of just how robust the labour market was at the end of 2018.
For 2019 we are looking for a pause in the pace in employment growth due to the economic uncertainties surrounding the Federal Election at the same time as we expect to see a moderation in momentum in NSW and Victoria on the back of a moderation in housing activity. With reasonable estimates for the participation rate, our weaker jobs growth profile has the unemployment rate lifting to 5.5% in the second half of 2019 and further by end 2020.
Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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Solid momentum behind Australian employment: Westpac's Justin Smirk

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EXPERT OBSERVATION
Labour market data provided two contrasting perspectives on Australia’s economy. Meanwhile, consumer sentiment strengthened, and business conditions remained above average.
Following last month’s 5.0% unemployment rate, a level historically regarded as consistent with full employment, the <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/November/Labour-FI_chart_packOct18.pdf" target="_blank">Australian labour force survey for October</a> was keenly awaited. It certainly did not disappoint, with the unemployment rate remaining at 5.0% despite a partial reversal of the 0.2ppt decline in participation seen in September. On a multi-month basis, it is employment not participation that is driving the unemployment downtrend. At October, annual employment growth stood at 2.5%yr, nearly a percentage point above population growth. Furthermore, those gains have largely been full-time in nature.
The above trend is favourable for household income growth, increasing aggregate hours worked across the economy and reducing slack. However, this tightening of the labour market is yet to stoke wages growth. In the September quarter, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/November/WPI_Q32018.pdf" target="_blank">the wage price index</a> rose just 0.6% (2.3%yr) and was weaker still for the private sector at 0.5% (2.1%yr). Arguably this disconnect between wages and employment growth is in part due to considerable underemployment (those working less hours than they would like to). That said, the current level of underutilisation is historically consistent with wages growth around 2.5%yr, not the 2.1%yr currently being seen in the private sector. Herein is evidence of other factors being at play, principally globalisation; technology; and a focus on efficiency amongst large corporates.
In terms of the outlook for wages, it is troublesome that the states of NSW and Vic, who have seen a more aggressive downtrend in unemployment and underemployment, are also yet to see a substantial lift in wages growth, respectively 2.2%yr and 2.5%yr at September.
The enduring disconnect between wages and employment arguably is a key reason why <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/November/er20181114BullConsumerSentiment.pdf" target="_blank">family finance perceptions</a> continue to lag households’ economic and labour market expectations; and now, even as family finance views are shifting to above long-run average levels, why ‘time to buy a major household item’ is at 18 month lows and spending intentions for Christmas are the weakest they have been since 2014. House price expectations, which are now on par with their lowest ever level back to mid-2009, are decidedly unfavorable for spending, as is the pressing cash-flow reality of high household debt. Weakness in consumer spending was also evident in the <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/November/er20181113BullAustralianBusinessConditionsOct.pdf" target="_blank">NAB business survey</a> for October, particularly in NSW. That said, while confidence is now below average in aggregate, conditions for businesses remain above average overall on the back of robust trading conditions and profitability.
Moving offshore, data released this week for China points to the investment trend having troughed. That said, the acceleration in activity will be slow in coming amid headwinds from ongoing structural change in the finance sector and, to a lesser extent, uncertainty associated with trade policy. On that front, murmurs of the US’ being willing to compromise with China on trade bolstered markets overnight. President Trump will meet President Xi at the end of the month. The hope is that this conversation can turn the tide and stop any further intensification of tensions. This would only be a starting point for negotiations however. Many hurdles must be overcome for a lasting solution to be attained.
For the US, data has been light but broadly supportive of the ongoing robust, non-inflationary uptrend in activity continuing, with the CPI benign in October (annual core inflation at 2.1%yr) as retail sales beat expectations (0.8%). Admittedly retail sales were bolstered by Hurricane season replacement spending in October and higher oil prices in the month, but underlying momentum remained robust. Chair Powell again showed confidence in the US economy and the outlook this week despite weakening residential investment and uncertainty over the lasting benefit of fiscal policy to growth. Recent market volatility is not a material concern, nor are global risks and trade tensions. But all are being watched closely. The move to hold a press conference after every FOMC meeting and to review “strategies, tools and communication practices” highlight a desire by Chair Powell and the Committee to be more nimble as this cycle matures. 
For Europe (and the UK), Brexit has again been the focus. A brief respite from Brexit uncertainty was seen mid-week as the UK Cabinet rubber stamped a transition deal agreed by UK and European negotiators. But multiple ministerial resignations the day after consequently put Prime Minister May’s position and the deal in jeopardy. It is not at all clear if the current deal will remain let alone what a replacement deal might look like. Of course the final deal, whatever its terms, then has to be passed by both the UK and EU parliaments. On the Italian budget, the Government has remained steadfast in not adjusting the proposal in response to disagreement from the European Commission. Whether the European Commission goes through with imposing infringement penalties will be of key interest in the weeks ahead.  
Elliot Clarke is senior economist at Westpac and can be contacted <a href="https://www.westpac.com.au/" target="_blank">here</a>.
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Strong jobs growth yet to spur wages and spending: Elliot Clarke

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EXPERT OBSERVATION 
The expected bounce in employment appeared in the October Labour Force Survey with a 32.8k rise.
The market median was for 20k. However, just as we saw in September, the mix was again positive with a 42.3k rise in full-time and a small 9.5k decline in part-time employment. In addition hours worked rose 0.3% following on from a 0.4% gain in September.
<a href="https://www.propertyobserver.com.au/images/2018/11/15/westpac%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/15/westpac%201.jpg" alt="">
 
Source: Westpac IQ
Perhaps more important is the continuation of the trend improvement in unemployment.
Sure, in the month unemployment was flat at 5.0%, but this is a good result seeing as the 0.3ppt drop in unemployment to 5.0% in September was due to a large drop in participation rather than a strong employment print.
As such there was always a risk the participation rate would bounce this month. Participation did rebound this month, but the 0.1ppt rise to 65.6% still left it under the 65.7% print in August.
<a href="https://www.propertyobserver.com.au/images/2018/11/15/westpac%202.jpg" target="_blank">Click here</a> to enlarge
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/15/westpac%202.jpg" alt="">
Source: Westpac IQ
Last month suggested that you need to take a holistic view of the Labour Force Survey and accept that some of the monthly volatility is associated with the survey groups being rolled into, and out of, the sample. This meant that while the 5.6k print (revised to 7.8k) on employment was too soft compared to underlying momentum, the fall in unemployment to 5.0% was also too aggressive. As such Westpac was forecasting a bump in employment in October and also a rise in unemployment (to 5.1%).
The fact that employment had a robust rise in October, and the unemployment rate was flat due a modest rise in participation, suggests the trend decline in unemployment remains in place. We had been forecasting that unemployment would end the year around 5.1%. Based on the current trend, it is more likely to be around 5.0%, if not below. It is only our expectation for participation to drift back up to 65.60% (currently 65.56%) that is holding unemployment at 5.0% at year end.
In terms of risks for November, the ABS notes that the outgoing sample group has the same employment to population group as the sample average, so by itself, the rolling of that group will not impact employment. However, that same group has a higher unemployment rate compared to the sample average so rolling that group out will lower the sample average. All else held equal, this presents downside risk to our unemployment forecast for November.
<a href="https://www.propertyobserver.com.au/images/2018/11/15/westpac%203.jpg" target="_blank">Click here</a> to enlarge
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/15/westpac%203.jpg" alt="">
Source: Westpac IQ
For a few months we have noted the robust labour market conditions in Victoria where unemployment had fallen to be almost on par with NSW (the national low for a large state). The last time this happened was when Victorian unemployment was on a rising trend. This matters because Victorian wages have been more responsive to changes in labour market conditions than the other states but especially compared to NSW. This month unemployment fell 0.1ppt to 4.5% in Victoria while it was flat in NSW at 4.4% (a 10 year low for this state). So Victoria continues to narrow the gap to NSW in terms of unemployment suggesting we need to keep a close eye on Victorian wages going forward.
<a href="https://www.propertyobserver.com.au/images/2018/11/15/westpac%204.jpg" target="_blank">Click here</a> to enlarge
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/15/westpac%204.jpg" alt="">
Source: Westpac IQ
By state, the largest gains in employment were in NSW (+16.3k following +1.1k in September) while Victorian employment fell (–3.5k after a robust +20.7k). It is the ongoing trend decline in Victorian participation that has been a key driver of falling national unemployment hence we are a little nervous about following this trend to generate a sub 5% unemployment rate by end 2019. Victorian female participation has trended below female participation in NSW, a very rare event. In that regard, while we would expect to see female participation rise in Victoria, we have to acknowledge that female participation could ease in NSW from its current record high level.
<a href="https://www.propertyobserver.com.au/images/2018/11/15/westpac%205.jpg" target="_blank">Click here</a> to enlarge
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/15/westpac%205.jpg" alt="">
Source: Westpac IQ
Employment fell again in Qld (–3.2k following –11.9k in September) and unemployment rose 0.3ppts to 6.3. Meanwhile, the recovery in the other mining state, WA, continues with a 3.1k lift in employment (+3.3k in September) while the unemployment rate fell again by 0.3ppt to 5.7%. This is the first time WA unemployment has been below 6.0% since January 2018.
Overall, we emphasise the need to look through the monthly volatility in the Labour Force Survey and focus on the broader trends in the labour market. The pace of employment growth has eased back from the 4.3%yr peak in 2017 to 2.5%yr in October and the six month annualised pace is also 2.5%. Both seem about right compared to leading indicators if you take into account the employment overshoot through 2017/2018. As such, while we do expect participation to trend higher, the rising trend in female participation may have come to an end (for now) just as male participation has stabilised.
The October survey is a sound update and it increases the risk that the unemployment rate could end this year with a 4 handle.
Justin Smirk is senior economist at Westpac.
You can find the complete chart pack <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/November/Labour-FI_chart_packOct18.pdf" target="_blank">here</a>. 
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Employment stats show continuing robust trend: Westpac's Justin Smirk

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GUEST OBSERVATION<a href="http://theconversation.com/institutions/griffith-university-828"></a>
That casualisation and self-employment rates are not increasing is often trotted out to dispute perceptions that workplace insecurity is growing.
But retorts like this miss a few key points.
First, the real causes of growing insecurity aren’t the type of contracts people are on. While these things matter, the real causes of insecurity are the way organisations are being structured these days. This is designed to minimise costs, transfer risk from corporations to employees, and centralise power away from employees.
Second, aggregate data mask variations between industries.
Third (and least importantly) there are some measurement issues.
Reducing cost and risk
Large corporations want to minimise their costs and risks, avoid accountability when things go wrong and ensure products have the features they want.
This partially explains the dramatic increase in franchised businesses – the franchisee bears responsibility for scandals such as underpaying workers.
Other corporations call in labour hire companies to take on responsibility for their workers. This cuts costs and transfers risk down the chain – which means jobs are more insecure.
Some set up spin-offs or subsidiaries. Some just outsource to contracting firms.
Most people working for franchises, spin-offs, subsidiaries and labour hire firms are still employees. It’s more efficient for capital to control workers through the employment relationship than to pay them piece rates as contractors. That would run the risk of worker desertion or of shortcuts affecting quality.
Is casualisation the same as insecurity?
Even employees at the bottom of the supply chain might get annual and sick leave. Offering leave helps attract labour and might be cheaper than paying casual loading.
And there’s no need to hire someone on a casual contract if you can make them redundant when the work dries up — if, for example, you lose your contract with the main parent firm. If your firm can go bankrupt, then you often won’t even have to pay redundancy benefits.
There are also the measurement issues. The Australian Bureau of Statistics counts the number of “employees without paid leave entitlements”. People take this to mean “casuals”. On this measure, the share of casuals in the workforce has shifted little in a decade, after growing substantially earlier.
If we take the liberty of labelling people without leave as “casuals”, then the number of “casual” full-timers grew by 38% between 2009 and 2017. Labour hire workers are usually casual full-time workers.
“Permanent” full-timers (those with annual leave) grew by just 10%.
On the other hand, some organisations have found relying on part-time casuals counterproductive, as workers had no commitment and became unreliable. Some large retailers now use “permanent” part-timers rather than casuals.
So-called “casual” part-timers grew by just 13% between 2009 and 2016. “Permanent” part-timers grew by 36%.
A lot of variation between industries and periods is hidden by aggregate figures. Franchising has grown in retailing. Labour hire in mining. Outsourcing in the public sector. Second jobs in manufacturing. Spin-offs in communications. Casualisation in education and training. Global supply chains send jobs overseas to low-paid, often dangerous workplaces in a number of industries.
The ABS doesn’t measure the precarity of work experienced by people who now work in franchises, spin-offs, subsidiaries or contractor firms. But as their continued employment depends on the fortunes of their direct employer, more than the firm at the top of the chain, precarity is real.
Underemployment has grown
Many “permanent” part-time jobs may be good jobs. But the continuing growth of part-time employment is linked to another form of insecurity – underemployment.
Between 2010-11 and 2016-17, the number of hours sought, but not worked, by underemployed people grew by 31%. This is five times the total growth in hours worked.
Large firms don’t even need to spin off workers to smaller business units to make use of underemployment.
There are other important sources of worker insecurity. In Australia, for example, firms can seek to have enterprise agreements terminated, or get a handful of workers to sign new agreements, to cut pay and conditions.
Some firms seek to put employees onto contrived arrangements that make them out to be contractors. Often that’s illegal.
The growing insecurity and hence low power of workers – even those with leave entitlements – helps explain why wage growth is stagnating.
Indeed, the successful “war on wages” may be the biggest sign of worker insecurity.
And what about the gig economy?
The gig economy, or more accurately the platform economy, is a big challenge to the employment relationship. This is because virtual platforms provide a new, cheap form of control that may replace the need for the employment relationship.
But there are still limits to the use of cost cutting and of platform control. The gig economy will grow, but it won’t overtake the employment relationship.
Gig work is one form of self-employment and we should remember that, overall, self-employment is not increasing. Self-employment declined between 2000 and 2014 in 26 countries for which data were available, and increased in only 11 (see chart below).
<img src="https://images.theconversation.com/files/229705/original/file-20180729-106521-3hokgi.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Changes in self-employment, 2000-2014, various countries. OECD, Author provided
What’s more, even the relative importance of large firms in total employment is not decreasing. That’s probably because of another trend — the concentration of markets in the hands of those firms.
In short, large powerful firms are getting more powerful, but their directly employed workforces are not getting larger. The result is a lot of workers with insecure incomes and a lot of insecure small-business owners as well.
<img src="https://counter.theconversation.com/content/100668/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">This means insecurity gnaws away, even while the employment relationship remains the dominant mode for deploying labour, and employment with leave entitlements remains its main form.
David Peetz, Professor of Employment Relations, Centre for Work, Organisation and Wellbeing, Griffith University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/self-employment-and-casual-work-arent-increasing-but-so-many-jobs-are-insecure-whats-going-on-100668" target="_blank">original article</a>.
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Self-employment and casual work aren’t increasing but so many jobs are insecure – what’s going on?

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The recent boom in housing supply in Sydney is slowing rapidly due to excessive levies and planning changes.
The development industry is a major provider of jobs in New South Wales, providing 400,000 direct jobs as well as generating huge employment in supporting industries and services.
But a recent survey of Urban Taskforce members indicates that the number of pre-sales for apartments has slowed down and this could have major impacts on employment, particularly in Sydney.
While the property industry is a huge driver of jobs in NSW it is the residential sector that represents 70% of these jobs.
It is therefore critical to keep the supply of residential projects flowing at the levels the NSW Government has proposed.
With 325,000 new homes required over 20 years according to the Greater Sydney Commission that translates to over 37,000 new homes a year.
The peak in recent times has reached this figure but there is a worrying drop in approvals over recent months and there seems to be an even bigger drop in pre-sales of apartments.
There are a number of contributing factors to the slowing housing market.
These include confusion over possible affordable housing levies, the raising of the cap on Section 94 infrastructure levies, the increase in the stamp duty from 4 to 8% in NSW for foreign investors which has turned them away and the restrictive policies of banks in lending to purchasers and to developers.
The Urban Taskforce has produced a publication on the importance of jobs from the development industry to the NSW economy which demonstrates the extensive number of specialist jobs that are part of residential construction, including apprenticeships which provide valuable training and opportunities for young people.
We need to keep the economy performing strongly so that the jobs and the funds keep flowing to federal and state governments from GST and Stamp Duty taxes.
Chris Johnson heads the Urban Taskforce, a property development industry group, representing Australia’s most prominent property developers and equity financiers.
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cjohnson-8xfqfuuCSq

Sydney housing boom starting to slow - and jobs will take a hit: Chris Johnson

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Australia posted a 16k increase in employment in January 2018 which records the longest streak of job gains with a 16th consecutive positive print. The month’s increase was very close to the market and Westpac’s expectation for a 15k rise.
However, the composition of employment changes was quite stark with full-time employment down 49.8k and part-time employment up 65.9k. That comes after a strong 2017 for full-time employment growth and the annual growth rate is still an elevated 3.6%.
In the month, hours worked fell 1.4%. The annual rate of change moderated to +0.5% from +3.2% but the series is volatile and this month’s movements were largely due to base effects. If hours worked holds steady in February, the annual pace will lift to +2.1%.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Labour1.jpg" alt="">
 
By state, Queensland posted the highest jobs growth, up 19.7k, maintaining solid momentum but January's lift was driven by gains in part-time employment. On the other hand, a soft month was recorded in NSW (-21.1k) and WA (-8.9k), both coming after some solid gains in December.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Labour3.jpg" alt="">
 
Annually, jobs growth strength has been fairly broad-based across the states, with the mining states recovering and the south-east expanding. Yet, we will watch the pace of jobs growth in Victoria closely with total employment flattening out over recent months after a very strong run up.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/StatesTotal.jpg" alt="">
 
Annual employment growth held steady at a brisk pace of 3.3%. Our Westpac Jobs index is still at a high level but the change in the index has moderated in recent months. Our outlook for employment growth in 2018 is positive with a forecast 2.2% annual rate an above trend pace albeit slower than 2017’s very strong performance. 
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Index.jpg" alt="">
Overall, while January’s update continues the run of positive employment numbers, key questions remain for the labour market.
Firstly, there is uncertainty on how the unemployment rate will change given our solid jobs growth forecast.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/LabourImage1.jpg" alt="">
In January, the unemployment rate fell slightly to 5.5% from 5.6% in December (revised up from 5.5%). This came with a decline in the participation rate to 65.6% from 65.7%.  Looking back over the past year, while the unemployment rate did fall from a peak of 5.9% in February 2017 to the current 5.5%, the drop was more muted than the gain in employment due to a rising participation rate. To examine how far the unemployment rate could continue to fall, we need to assess how far the participation rate could rise.
The first thing to note is that the uplift in the participation rate has been driven mainly by females joining, re-joining, or remaining for longer in the labour force. However it should be noted that this spike occurred alongside a rising male participation rate which had otherwise been in a downtrend. That compares to 2015’s spike in female participation, where the male participation rate held its level rather than increasing. This suggests that the most recent lift in participation rate has a cyclical aspect to it with stronger employment generally attracting more people to the labour force. In addition, subdued wages growth, high household debt and high house prices may be necessitating dual-income households. However, given the outsized gain in female’s participation there is also likely a structural gender dynamic occurring as well.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/GenderST.jpg" alt="">
Converging male and female participation rates have been a long-term trend due to the large social change in women joining the workforce. Yet, the rate of convergence had been flattening out as the generational shift filtered its way through the labour market over time. Between the periods of 2009 and 2014, the female participation rate had remained relatively unchanged at around 58-59%. Perhaps this means that in aggregate, the recent increase in female participation is due to structural reasons outside of the generational shift in behaviour. A look at the type of jobs created over the past year suggests a changing composition of employment may have been a significant factor.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/GenderLong.jpg" alt="">
 
The graphs below show the annual jobs increase in the year to November 2017 (lhs) across different economic sectors broken down by gender. It is ordered by the female share of employment in the individual sector (rhs) with the top graph showing the sectors with the highest proportion of female employees, and the bottom graph the lowest. 
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Sector1.jpg" alt="">
 
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Sector2.jpg" alt="">
 
The striking aspect about the top chart is that the four sectors with the largest proportion of female jobs (health care, education, accommodation &amp; food and retail trade) accounted for 242k of the total 387k jobs created over the year to November 2017 and 202k of those new employees in the sectors were female. That contrasts with the bottom chart where the only standout sector is the construction industry which has a very large male proportion and men accounted for 109k of the net 101k increase. This suggests that the rise in female participation is a reaction to strong employment growth in sectors that typically have a higher proportion of female employment. These service sectors have been key to the transitioning economy and therefore strength is likely to continue. On the other hand, the construction sector accounted for 109k of the total 178k annual increase in male jobs. While the level of homebuilding remains at a high level, supply-demand factors look more balanced and slowing house price growth should restrain housing investment. The uncertainty here is whether similar jobs with transferrable skills will be created in other sectors. Given the large transitional shift in the types of jobs created, we will likely see tightness in the labour market in some pockets before others. That leads onto the second question surrounding the unemployment rate in regards to where the NAIRU sits – the rate that we start to see wage pressures come through.
 
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/Labour4.jpg" alt="">
The RBA’s estimate of the NAIRU is around 5%. Yet, even though the unemployment rate has been approaching 5% over the past year, we are yet to see a reaction in wages. In a speech on Tuesday at the ABE Forecasting Conference, Assistant Governor Economic Ellis mentioned that “we are mindful that, as we approach that figure, there's a risk we find there is more room to come down before wage growth picks up in earnest”.
A possible reason for a lower NAIRU is that there is more slack in the labour market than that indicated by the unemployment rate alone. Indeed, the underemployment rate has held a high level with the last seasonally adjusted estimate at 8.3% in November. <img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/SimonImages/VolumeUnder.jpg" alt="">
 
It is difficult to draw a conclusion on what a high underemployment rate means for overall slack in the labour market. The ABS provides quarterly non-seasonally adjusted data on volume measures of unemployment and underemployment based on the hours of available labour. The data is consistent with the previous headcount measures in terms of directional movement. In terms of quantity, as at November, it shows underemployment at 3.1% and therefore a sizable proportion of the combined 7.2% of underutilised hours. But the readiness of the underemployed pool of labour to be drawn upon is uncertain given that it may require changing jobs rather than going from not employed to employed.
As such, finding the level of NAIRU may only be possible in hindsight - after we start to see wage pressures emerge. With that in mind, next Wednesday’s Wage Price Index data is all the more critical.
 
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jrobinson-rf4aSBido9

January employment increase makes new Australia record

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<img src="https://counter.theconversation.edu.au/content/82207/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Workers aren’t being compensated as much as they should be for precarious work in casual positions. 
One in four Australian employees today is a casual worker. Among younger workers (15-24 year olds) the numbers are higher still: more than half of them are casuals.
These jobs come without some of the benefits of permanent employment, such as paid annual holiday leave and sick leave. In exchange for giving up these entitlements, casual workers are supposed to receive a higher hourly rate of pay – known as a casual “loading”. 
But the costs of casual work are now outweighing the benefits in wages.
Costs and benefits of casual work
Casual jobs offer flexibility, but also come with costs. For workers, apart from missing out on paid leave, there are other compromises: less predictable working hours and earnings, and the prospect of dismissal without notice. Uncertainty about their future employment can hinder casual workers in other ways, such as making family arrangements, getting a mortgage, and juggling education with work. 
Not surprisingly, casual workers have lower expectations about keeping their current job. For example the Australian Bureau of Statistics (ABS) found 19% expect to leave their job within 12 months, compared to 7% of other workers. Casuals are also much less likely to get work-related training, which limits their opportunities for skills development.
The employers of casual workers also face higher costs. High staff turnover adds to recruitment costs. But perhaps the main cost is the “loading” that casual workers are supposed to be paid on top of their ordinary hourly wage. 
Australia’s system of minimum wage awards specifies a casual loading of 25%. So, a casual worker paid under an award should get 25% more for each hour than another worker doing the same job on a permanent basis. In enterprise agreements, the casual loading varies by sector, but tends to be between 15 and 25%.
The practice of paying a casual loading developed for two reasons. One was to provide some compensation for workers missing out on paid leave. The other, quite different, motivation was to make casual employment more expensive and discourage excessive use of it. However this disincentive has not prevented the casual sector of the workforce from growing substantially.
Casual jobs aren’t much better paid
One approach in determining whether casual workers are paid more is simply to compare the hourly wages of casual and “non-casual” (permanent and fixed-term) employees in the same occupations. This can be done using data from the 2016 ABS Survey of Employee Earnings and Hours. 
We compared median hourly wages for adult non-managerial employees, based on their ordinary earnings and hours of work (i.e. excluding overtime payments). If the median wage for casuals is higher than for non-casuals, there is a casual premium. If the median casual wage is lower, there is a penalty.
The 10 occupations below accounted for over half of all adult casual workers in 2016. In most of these occupations, there is a modest casual wage premium - in the order of 4-5%.
The size of the typical casual wage premium is much smaller, in most cases, than the loadings written into awards and agreements. Only one occupation (school teachers) has a premium (22%) in line with what might be expected.
Three of the 10 largest casual occupations actually penalise this sort of work. And overall for these 10 occupations there is a casual wage penalty of 5%. This method of analysis suggests that few casual workers enjoy substantially higher wages as a trade-off for paid leave.
Taking a closer look involves controlling for a wider range of differences between casual and non-casual workers. One major Australian study in 2005 compared wages after taking account of many factors other than occupation, including age, education, job location, and employer size. 
All else equal, it found that part-time, casual workers do receive an hourly wage premium over full-time, permanent workers. The premium is worth around 10%, on average, for men and between 4 and 7% for women.
These results imply that most casual workers (who are in part-time positions) can expect to receive higher hourly wages than comparable employees in full-time, permanent positions. However, the value of the benefit is again found to be less than would be expected, given the larger casual loadings mentioned in awards and agreements. 
It seems that while there is some short-term financial benefit to being a casual worker, this advantage is worth less in practice than on paper.
A recent study, using 14 years of data from the Household, Income and Labour Dynamics in Australia Survey (HILDA), finds no evidence of any long-term pay benefit for casual workers. 
The study’s authors estimate that, among men, there is an average casual wage penalty of 10% - the opposite of what we should see if casual loadings fully offset the foregone leave and insecurity of casual jobs. Among female casual workers, there is also a wage penalty, but this is smaller, at around 4%. 
This study also finds that the size of the negative casual wage effect tends to reduce over time for individual workers, bringing them closer to equality with permanent workers. But very few casual workers out-earn permanent workers in the long-term.
Inferior jobs, but fewer alternatives
The evidence on hourly wage differences leads us to conclude that casual workers are not being adequately compensated for the lack of paid leave, or for other forms of insecurity they face. This makes casual jobs a less appealing option for workers.
This does not mean that all casual workers dislike their jobs – indeed, many are satisfied. But a clear-eyed look at what these jobs pay suggests their benefits are skewed in favour of employers.
Despite this, the choice for many workers - especially young jobseekers - is increasingly between a casual job or no job at all. Half of employed 15-24 year olds are in casual jobs. 
In a labour market characterised by high underemployment and intensifying job competition, young people with little or no work experience are understandably willing to make some sacrifices to get a start in the workforce. The option of “holding out” for a permanent job looks increasingly risky as these opportunities dwindle.
<a href="https://theconversation.com/profiles/joshua-healy-104950" target="_blank">Joshua Healy </a>is Senior Research Fellow, Centre for Workplace Leadership, University of Melbourne.
<a href="https://theconversation.com/profiles/daniel-nicholson-315854" target="_blank">Daniel Nicholson</a> is Research Assistant, Industrial Relations, University of Melbourne.
Both are authors for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>.
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The costs of a casual job are now outweighing any pay benefits

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GUEST OBSERVER
There has been a marked improvement in the Australian labour market with a lift to total employment, of which the largest share has been full-time, and a drop in the unemployment rate.
Despite a clear tightening in labour market conditions we are yet to see a lift in wage inflation.
Firms do not appear to be under pressure to lift wages to attract staff while rising underemployment and relatively high unemployment expectations suggest household are not confident enough to bargain for stronger wage rises.
Since 2015 wages have underperformed the historical relationship but this underperformance is less clear in Victoria. The relationship is still broadly holding in SA.
<a href="https://www.propertyobserver.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.34.44%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.34.44%20AM.png" alt="">
It is not yet clear if we have seen a shift in the curve or a breakdown in relationship. Regardless, we expect any lift in wage inflation to be modest and gradual. 
A meaningful improvement in the labour market conditions.
The Australian labour market went through a soft patch from August to November in 2016 when the average gain in employment was a paltry 2.2k per month. So far in 2017 there has been a distinct uplift in employment. In the three months to May, total employment gained 141.1k, or an average of 47k per month, lifting the annual pace from 0.9%yr to 2.0%yr. Employment growth is now more in line with our preferred leading indicators, the various business survey’s and household demand.
Taking the Labour Force data at face value, you could argue there has been a material tightening in labour market conditions. The quarterly unemployment rate peaked at 6.2% in 2015 Q3 then fell steadily to average 5.7% for the three months to May 2017, pointing to a material tightening. And it is not just unemployment that is pointing to an improvement.
<a href="https://www.propertyobserver.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.35.53%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.35.53%20AM.png" alt="">
We have also seen a recovery in full-time employment. Through 2016, full-time employment fell 35k as part-time employment rose 127k. In 2016, all of the growth in total employment came from the significant lift in part-time employment. In the year to May 2017, full-time employment rose 148k for a 1.8%yr pace, so full-time employment growth is now exceeding growth in the working age population, the first time it has done so since February 2016.
And yet wages continue to languish at record lows.
Normally when you observe a tightening in the labour market, you would expect to see an increase in wage inflation. But we have not seen this with wage inflation, as measured by the Wage Price Index (WPI), holding at a historical low of 1.9%yr. One measure of tightness is to compare the unemployment rate to the rate unemployment would be if the economy was at full employment.
The RBA estimates a NAIRU, or Non-Accelerating Inflation Rate of Unemployment, to be currently around 5.0%. So while there is still a gap, the unemployment rate has moved closer to the NAIRU representing a tightening of the labour market.
<a href="https://www.propertyobserver.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.37.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.37.22%20AM.png" alt="">
Westpac uses a labour gap which is the difference between unemployment and trend unemployment. Historically the labour gap had a two quarter lead to wage inflation. In the year to the June quarter, the labour gap averaged +3ppts; the last time it was this positive was back in September 2012 when wage inflation (as measured by the Wage Price Index) was running at a 33⁄4%yr pace. Wage inflation printed 1.9%yr in the March quarter of 2017.
Employers do not feel under pressure to bid up wages.
Another measure of slack is the “is labour easy or hard to find” question from the Westpac/Australian Chamber business survey. However, whereas from early 2016 the labour gap was pointing to a tighter labour market conditions, this index suggested labour was still relatively easy to find. While it may have become bit harder since, it is still consistent with a neutral response (neither easy nor hard to find) and as such it does not appear that employers are under any pressure to bid up wages.
Underemployment has lifted as job insecurity holds a relatively high level.
Could employees’ employment insecurity have a role to play? Since late 2014, unemployment expectations from the Consumer Sentiment survey has been relatively weaker than its historical relationship with unemployment so maybe workers aren’t confident enough to bid up wages.
There does appear to be some basis for this relatively high level of job insecurity. The ABS has an alternative labour market measure known as underemployment, which is the share of labour that while employed are willing and able to work more hours. From 2015 H2, while the underemployment rate fell from a peak of 6.1% to 5.5%, the underemployment rate rose from 8.3% to 8.8%, with an 8.9% peak in early 2017.
The RBA noted in the February Statement on Monetary Policy that since the 1980’s, the upward drift in underemployment can be explained by the rising share of part-time employment. It also noted that “underemployment rates are higher among groups that have a higher share of part-time employment, such as females, younger workers and older workers”, so as their share of employment rises so too does underemployment.
We would, however, counter with two observations.
Firstly, in the year to May, full-time employment growth accelerated while part-time employment eased, yet underemployment lifted from 8.4% to 8.8% suggesting a genuine broadening in underemployment rather than a compositional shift.
Secondly, combining unemployment and underemployment generates underutilisation, the broadest measure of labour market slack. We have found that this measure has a better relationship with wage inflation than either unemployment or underemployment by themselves. But this still leaves the observation that, since 2015 there has been an underperformance of wage outcomes to underutilisation.
State data reveals some interesting divergences from the national average.
How long can we divert from this historical relationship? To answer we turn to the state labour markets. In NSW the unemployment rate in May was just 4.8%, well below the national average and below the RBA’s estimate of the NAIRU. From the end of 2015, NSW’s unemployment fell from 5.3% to 5.1% (March quarter average) and yet underemployment lifted from 7.5% to 8.0% boosting underutilisation from 12.8% to 13.1%. However, even this softening in underutilisation does not explain the on-going weakness in private sector wage inflation, which printed just 2.0%yr in the March quarter. If wage inflation held the historical relationship with underutilisation, it would just under 3.0%yr.
We should also note that NSW also has the lowest participation and employment to population ratio for any mainland state outside of SA. These factors put into perspective the fact that NSW low unemployment is not a strong indicator of the overall tightness of a labour market.
Compare this with Victoria, where wages have kept something of a tighter relationship with underutilisation. At 15%, underutilisation suggests wage inflation should be running at just under 21⁄2%yr. The state’s WPI printed 1.9% in March which is a smaller wedge to underutilisation than in NSW. Victoria also has a higher rate of unemployment than NSW (6.1% vs. 4.7%) and underemployment (8.6% vs. 8.0%) but that does not necessarily mean Victoria has a weaker labour market.
Total employment has grown just under 4%yr pace in Victoria while in NSW it has grown less than 1%yr. The higher rate of underemployment and unemployment in Victoria reflects that states faster rate of population growth combined with a higher rate of participation (for both males and females). Victoria is also the only state where you can observe a trend rise in male participation since 2014. Other states may show something of a levelling out, or a recovery, since late 2016 but all declining male participation preceding. It has also recently seen the largest jump in female participation for any state.
In Qld, wages are below the curve with an underutilisation rate around 14% pointing to wages growth of at least 3.0%yr. Wages in that state are currently growing at 1.8%yr, a significant wedge to historical outcomes. Male participation has started to lift again in Qld so even if we do see the underutilisation/wage relationship return to the curve, will it be driven by rising wages or rising underutilisation due to rising participation?
<a href="https://www.propertyobserver.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.38.30%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/14/Screen%20Shot%202017-07-14%20at%208.38.30%20AM.png" alt="">
WA is interesting in that while wage outcomes since 2015 are clearly below the longer run relationship with underutilisation, the shape of the relationship still holds - that is it appears that the curve has shifted downwards since 2015. This suggests that while the historical underutilisation/wage relationship would put wages growth around 2%yr (for a 15% underutilisation rate) actual wages growth of just under 1% appears to be holding a shorter term relationship since 2015.
Of all the states SA is holding the tightest long-term relationship for underutilisation/wages. An underutilisation rate of around 17% would normally see wages grow at 21⁄2%yr; the WPI rose 2.0% in the year to the March quarter. We have been watching the relative out performance of wages in SA despite the relatively high rates of unemployment (and underemployment) and wonder if this reflects the relatively more significant contribution manufacturing makes to that state's economic activity compared to the other states.
It is not clear if curve is shifting or breaking down.
The significant underperformance of NSW wage inflation does raise questions not just on the specification of a NAIRU but whether the NAIRU is still a useful concept. It is possible that the breakdown in the NAIRU is due, at least in part, to the Australian economy’s shift away from goods production to services provision, which is more dominate in NSW than it is in Vic and SA, and as such the breakdown may be temporary.
The downward shift in the WA curve suggests this may be the case as that state has seen it economy experience a rapid and significant shift away from the resources sector. But the significantly different participation rates between the states may also point to something more structural. As such, to assume that a falling unemployment rate will drive an uptick in wages may lead to an overstatement of the outlook for wages, household income growth and thus inflation and consumption. Currently Westpac is taking a cautious view that while wage inflation may have found a base, any uptick will be modest and gradual. 
Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/">here</a>.
 
 
 
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Australian wages underperforming current labour market conditions: Justin Smirk

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GUEST OBSERVER
Australian employment rose by a stronger than expected 37,400 in April taking annual jobs growth back up to 1.6 percent. Coming on the back of a 60,000 gain in March this is much better than expected.
Full time jobs declined by 11,600 so the quality of jobs growth was poor but this followed two strong months of full time jobs growth.
Unemployment fell to 5.7 percent as the participation rate was unchanged and remains in the same range it’s been in for 18 months.
<a href="https://www.propertyobserver.com.au/images/2017/05/18/unemployment.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/18/unemployment.png" alt=""> The strength in jobs growth is to be welcomed and suggests that jobs growth is heading back towards the solid pace indicated by forward looking jobs indicators (like job ads, vacancies and hiring intentions from the NAB survey).
As combined in our Jobs Leading Indicator these forward looking indicators continue to point to strong jobs growth ahead (although it has been overstating jobs growth a lot lately).
<a href="https://www.propertyobserver.com.au/images/2017/05/18/unemployment%202.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/18/unemployment%202.png" alt=""> Implications
April’s jobs data is consistent with Reserve Bank expectations and so on its own is consistent with interest rates remaining on hold.
The risk though is that weakness in retail sales (on the back of subdued consumer confidence and weak wages growth) and weaker growth in housing construction will start to impact employment growth down the track.
Fortunately, forward looking jobs indicators are continuing to hold up at present suggesting reasonable jobs growth ahead.
Shane Oliver is AMP Capital's Head of Investment Strategy and Chief Economist. You can follow him on Twitter <a href="https://twitter.com/shaneoliveramp" target="_blank">here</a>.
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