With unemployment continuing to rise in August by 28,000 people, Australia must change its approach to reducing inflation to avoid the comparatively higher unemployment of other advanced nations, said the Australian Council of Social Service.

Largely as a result of lower average interest rates over the period from 2022 to 2025, Australia has substantially lower unemployment than other comparable countries such as Canada (6.4%) and New Zealand (5.6%), with headline inflation at similar levels.

“Since we started to increase interest rates, unemployment has also begun to rise with over 200,000 additional people out of paid work since mid 2022.

“Our comparably low unemployment rate remains a considerable achievement which we cannot take for granted. It must be protected,” said ACOSS CEO Dr Cassandra Goldie.

“There is no question that increasing unemployment towards 5 or 6% would represent a human disaster, with long lasting damaging impacts for people unnecessarily locked out of the labour market and forced to rely on grossly inadequate income support payments (Jobseeker is now just 40% of the minimum wage).

“The biggest threat to a person’s living standards is losing the opportunity for employment.

“More damaging interest rate rises increases the very real risk that Australia will follow countries like Canada and New Zealand in experiencing large increases in unemployment, which will take years to unwind.

“The RBA should resist rate rises that would trigger further loss of the post pandemic labour market gains. The government must now take the lead in managing inflation, with an emphasis on ensuring that inflation is reduced fairly and that people on low incomes are protected.”

Background:

• Total unemployment has increased by over 200,000 since mid 2022, when interest rates first started to rise.

• People receiving the jobseeker payment for a year or more has increased by 100,000 over the last two years and is above its pre-pandemic level.

• Job vacancies at the lowest skill level have fallen by 31% since 2022, the largest fall of any skill level

• Australian official interest rates averaged 3.3% from 2022 to 2025. The unemployment rate is 4.6% and the inflation rate is 3.5%.