Reserve Bank Governor’s Forecasts for 2022
In an address to the National Press Club of Australia last week, the Reserve Bank Governor, Dr Philip Lowe has outlined very positive economic forecasts for the year ahead in 2022.
Dr Lowe noted that GDP Growth, CPI and underlying inflation were above forecast in 2021, and unemployment was below forecast. The economy performed better than expected in 2021.
Cautions & Challenges
While cautioning that the global pandemic was not behind us, he noted that the worst of the disruptive elements of Omnicrom appear to have passed, and he expected a ‘strong bounce back’ this year.
Dr Lowe also noted that Job Vacancies were more than 2.5% of the workforce and strong demand for labour is expected to continue. Underemployment (workers desiring to work more hours e.g.: part time employees seeking more hours) is the lowest in 13 years. He noted that the challenge is to lift productivity growth, and to invest in workforce skills.
Forecasts for 2022
The Reserve Bank’s forecasts for 2022 are as follows:
- GDP Growth of 4.25%;
- Unemployment to decrease to around 3.75% by the end of 2022, and continuing at ‘around this rate’ for 2023;
- Wage/Price index (index of the total hourly rates of pay excluding bonuses paid by employers) to increase by 2.75% this year and by 3% in 2023.
- Increased labour force participation and an increase in average hours worked by part time employees.
Implications for Employers
The forecast for continuing strong labour demand will be no surprise to employers. Given these forecasts, attraction and retention will be a major consideration for employers for the foreseeable future. Many employers reviewing their attraction and retention programs such as monetary and non-monetary benefits, workplace culture, leadership and the employee value proposition. Employers seeking guidance on attraction and retention programs, workplace culture, leadership and other relevant matters are invited to contact our Leadership and Culture Team.
In mid – December 2021, the Federal Government introduced travel exemptions for non-citizens with critical skills to work in critical sectors. Employers seeking further clarity and advice on recruiting visa workers with critical skills in critical sectors are invited to contact our Business Migration Team.
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