Monthly Market Review May 2023

Posted on Thursday, June 8, 2023 by EditorNo comments

•             GPC partnership to boost container trade

•             Unemployment rate at 3.7%

•             Increases for minimum wage and Award workers

Container partnership for Gladstone

On May 12th Gladstone Ports Corporation (GPC) announced their partnership with ANL, to commence container trade through the port of Gladstone, which they see as the first step to becoming the next major container terminal on the east coast of Australia.  The announcement highlighted GPC’s potential to bring further several benefits to the local economy.  Job opportunities are expected, not only within port operations but also ancillary industries and businesses who attract additional investment and increased demand to the region.  It is important to note however, that jobs growth will depend on several factors, including scale of operations, market demand and the extent to which local labour is utilised.  Potential job creation needs to be balanced against potential environmental and social impacts, to ensure sustainable development in the region.

National Unemployment rate nudges up

According to data released by the ABS in May, the national unemployment rate rose to 3.7% in April, up 0.1% on the prior month.  Seasonally adjusted hours worked increased by 2.6%.  What this indicates is that fewer people worked reduced hours over the Easter period than usual.  This is reflective of the ongoing demand to find workers to fill vacancies, with that demand being filled by existing employees working more hours.  Bjorn Jarvis, ABS head of labour statistics said, “In trend terms, the strong growth in hours worked, the high employment-to-population ratio and participation rate, along with the low unemployment and underemployment rates, all still point to a tight labour market."  Certainly, here in Central Queensland the tight labour market is an ongoing challenge.

Worker pay boost presents challenges and opportunities for business

The announcement that Australia's minimum wage will increase by 8.6 percent and award workers will receive a 5.75 percent pay boost will have significant effects for millions of workers and businesses in the country.

For workers, this wage increase will provide a much-needed improvement in their standard of living. With the rising cost of living, a higher minimum wage can help low-income workers meet their basic needs, reduce financial stress, and potentially lift some workers out of poverty. It can also contribute to reducing income inequality by ensuring a fairer distribution of income across different segments of the workforce.

Moreover, the pay boost for award workers, who are covered by specific industry or occupation-based wage agreements, can enhance their overall financial well-being. It recognises their skills, experience, and contributions to their respective sectors, and can act as a motivating factor, boosting employee morale and productivity.

From a business perspective, the wage increase poses both challenges and opportunities. Some businesses, particularly smaller ones or those operating on tight profit margins, may face increased labour costs. This can put pressure on their profitability and potentially lead to difficult decisions such as reducing employee hours, limiting new hiring, or increasing prices to compensate for the higher wages.

On the other hand, the pay boost can have positive implications for businesses as well. When workers earn higher wages, they have more disposable income, which can drive consumer spending and stimulate demand for goods and services. This increased consumer demand can benefit businesses, leading to higher sales and potentially fuelling economic growth. 

However, there is concern that raising the minimum wage and award rates can potentially have implications for inflation and interest rates, with some economists warning of further rate hikes.

How will the economy and prices be impacted?

Prices for goods and services may rise further, as businesses compensate for increased labour expenses.  Those businesses operating on thin profit margins and unable to absorb the additional costs or pass them on to consumers may face financial challenges leading to reduced investment and limited job creation.  The impact on small businesses, who have less flexibility and limited resources remains to be seen.

Strking a balance between fair wages and business viability is crucial for sustainable economic growth and it is interesting to note that Reserve Bank governor Philip Lowe said that wages had not been driving Australia’s inflation up to this point.  The impact of the raises on the well-being of our local workers and businesses will be an area we closely watch.

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