Pandemic-driven staff shortages could lift wage growth

Even though the unemployment rate is still as high as it was during the mining bust, job vacancies and the share of firms reporting staff shortages have surged. We suspect that this has been driven by a broad-based drop in labour mobility during the pandemic and net migration turning from a large boost to labour force growth to a small drag. As vaccines are rolled out and restrictions are relaxed, the functioning of the labour market should improve. But coupled with our optimistic forecasts for unemployment, firms’ inability to find suitable staff means that wage growth could rebound faster than most anticipate.