Australia's jobs market has continued to strengthen, with unemployment remaining at 3.9 per cent last month and underemployment falling to a 14-year low.
The latest monthly Bureau of Statistics figures estimate 60,600 extra people were employed in May, driven entirely by full-time jobs.
The number of people considered officially unemployed increased by 7,800, as more people entered the labour force.
The strength of the jobs market has seen the underemployment rate hit a 14-year low, dropping from 6.1 per cent to 5.7 per cent.
With the unemployment rate sitting close to a 50-year low, the under-utilisation rate has tumbled to a 40-year low.
"At this point of the cycle, with the unemployment rate at a near 50-year low, this is an outstanding result," Callam Pickering, APAC economist at global job site Indeed, said.
"Particularly given the growing concerns around inflation and higher interest rates.
"The next 12 months won’t be easy, but we enter this challenging period from a really strong position that will hopefully allow households and businesses to weather the storm."
More people joining the labour force, strong growth in full-time jobs
In May, as more people joined the labour force, the participation rate jumped to a fresh record high, up from 66.4 per cent to 66.7 per cent.
That explains why the unemployment rate remained steady at 3.9 per cent, because the strong growth in the labour force offset the growth in employment itself.
Ben Udy, an economist from Capital Economics, said even though the unemployment rate has been stuck at 3.9 per cent for three months, it could keep falling.
"Given that the stable rate in May was driven by a significant pick-up in the labour force, we still think the unemployment rate will fall further before long," he said.
"Job vacancies continue to rise to new record highs consistent with a persistent decline in the unemployment rate in the months ahead.
"We think the unemployment rate will fall to 3.5 per cent by the end of this year," he said.
Belinda Allen, an economist from Commonwealth Bank, said the unemployment rate of 3.9 per cent is actually hiding how tight the labour market is becoming.
"There is a clear lift in full‑time employment underway," she said.
"Since February 2020, full‑time employment has risen by 570,600 while part‑time employment has fallen by 60,600.
"This reinforces the tightening in the labour market that has occurred over the pandemic period as businesses look to secure more workers, but also more hours."
Staff shortages are biting
Some employers say it has become really difficult to find workers.
Finding staff is a big concern for Anthony Iacono, who co-owns Bertoni cafe in Sydney's inner-west with his brother Albert.
"We're probably three or four people down, we have a team of about 12, so I'd say we're about 25 per cent down on the number of people," said Mr Iacono.
His cafe is open seven days a week in inner Sydney suburb Balmain, and it remained open for takeaway service through the COVID outbreaks.
But the disruption of the lockdowns, the spread of COVID, and the closing and reopening of the country's borders have all had ripple effects.
"The last couple of years, because of COVID, we've lost some people along the way and we just can't fill those roles with experienced people," he said.
Mr Iacono relies on some migrant students to work in his cafe, but even though the international border has reopened, he said he is not seeing that reflected in the labour market.
"I don't get any of those applicants that I used to get … so it's been really challenging," he said.
One of the vacancies he's been trying to fill, an assistant manager role, has been advertised on multiple platforms for over two months.
He and his brother are working even more hours on the floor to keep their cafe open.
"My brother and I have had to pick up an extra three or four shifts in the week on that side, which means everything else gets delayed, and paperwork and stuff happens after hours," he said.
And his existing staff are working more hours too.
"Every staff member who's been around for more than a year has had to put in extra hours; they're doing an extra six, 10, 12 hours a week. When you're already doing 40 hours a week, in our industry, that's a lot of hours," Mr Iacono said.
"It's been draining on everyone."
Workers take advantage of tight labour market
But as the labour market keeps tightening, some workers are converting to more secure work.
Educator Jessica Sward recently became a permanent member of staff at Explore and Develop Childcare in Rosalie, in Sydney's north shore.
"It was a couple of weeks ago, I was just made permanent and I'm really happy that I've started that now," she said.
"Having the set hours per week is good and it's very secure for me, knowing that I'm permanent.
"Being casual definitely wasn't my forte."
Ms Sward, who has a learning disability, used a specialist recruitment business to help find her a job.
"I had Omnia Inclusive Employment Solutions help me. They basically help people who have disabilities find a long-lasting career in their job so that they can succeed like I am," she said.
As job ads remain unfilled, Ms Sward hopes other people with a disability can find meaningful work with supportive employers.
She said she started as a casual member of staff at the centre in December after obtaining her Certificate III in child care.
She plans to complete a diploma in child care next year, and she is now working four days a week.
"I just loving being with the children, every day coming into work and seeing them smiling at me, and being with the children doing group time, singing … just helping them grow and achieving in everyday life," she said.
Minimum wage increased
The data showing a tight jobs market came a day after the Fair Work Commission (FWC) announced it was lifting the minimum wage.
The FWC said from July 1, the minimum wage would increase by $1.05, to $21.38 an hour.
It represents a 5.2 per cent increase.
The FWC said it did not believe the pay increase would have an adverse impact on employment growth, given the relative strength of the economy and the fact that business profits had increased by 25 per cent in the past year.
But economists say dynamics in the economy have been getting far more challenging as central banks start lifting interest rates quickly to prevent inflation getting out of control.
Citi's economics team thinks Australia's Reserve Bank will lift the cash rate target from 0.85 per cent to 2.6 per cent by the end of this year.
They warned that could put a "significant handbrake" on growth and cause the unemployment rate to rise to 4.5 per cent.
"Recession risks for 2023 are also elevated," they said.
