Pushing up unemployment isn't the solution to the skills shortage
The Reserve Bank is engaging in economic backburning. But that will be of little consolation to those who end up feeling the heat.
A huge rise of 65,000 people getting jobs last month is a major shock to most economists.
It will also likely be a jolt to Federal Treasurer Jim Chalmers, who sent early commentary to media on Wednesday saying that we “shouldn’t be surprised” if we see joblessness ticking up. He was foreshadowing that the Australian Bureau of Statistics might show signs the economy is under pressure from high but moderating inflation, global uncertainty and higher interest rates.
His comments were too early, but they’re probably not wrong.
With higher interest rates, the Reserve Bank is undertaking the economic equivalent of backburning — set fire to some of the overgrowth now to avoid more widespread and harder to control economic pain later (in the form of higher inflation and even higher interest rates).
But despite — or perhaps because of — all the smoke in the air, it’s unclear whether enough has been done.
