Australia’s official unemployment rate rose to 4.3 percent in June, up from 4.1 percent in May. That takes it to the highest level since November 2021, following the dismantling of COVID-19 pandemic protection measures.
The result is an early indicator of the impact of the economic slump and nervousness within the corporate elite caused by the Trump administration’s worldwide tariff war, which is above all targeting China, Australian capitalism’s largest export market by far.
According to the Australian Bureau of Statistics (ABS) data, seasonally adjusted employment increased by just 2,000 people in June, despite population growth. The number of officially unemployed people jumped by 33,600, or 5.4 percent, to 659,600. That is up by 9.6 percent over the past 12 months, accelerated by Washington’s tearing up of trade agreements.
Moreover, full-time employment fell by 38,000 people and the number of hours worked dropped by nearly 1 percent, although part-time employment grew by 40,000 people. In Victoria, one of the most industrialised states, the jobless rate rose to 4.6 percent.
The brunt of the downturn is being felt most by young workers. Youth unemployment (workers aged 15 to 24 years) surged from 9.5 to 10.4 percent, also its worst level since November 2021.
ABS estimates are always a gross understatement of the true level of unemployment, because they only count people who are classified as actively and immediately applying for jobs. The number of workers depending on sub-poverty Jobseeker or Youth Allowance (for those under 22) dole payments is much higher. It reached 935,160 in June, up by nearly 10 percent over the past year.
Harry Murphy Cruise, head of economic research for Oxford Economics Australia, told the Australian Broadcasting Corporation: “President Trump’s tariffs are weighing on business investment and prompting some firms to rethink hiring plans. Even though Aussie businesses are largely out of the direct line of tariff fire, global uncertainty is lapping at our shores.”
That is an understatement. Prime Minister Anthony Albanese has been unable to secure a meeting with US President Donald Trump to discuss tariffs. These include a 10 percent across-the-board impost on Australian exports to the US, plus tariffs of between 50 and 200 percent on steel, aluminium, copper and pharmaceuticals.
Months of nervous attempts by Albanese and his government to negotiate with Trump or his administration have made no difference to these escalating measures. Then, on the eve of Albanese’s six-day visit to China this week—mainly seeking to maintain massive iron ore exports to China—the Trump administration threw a shadow over his trip by demanding a commitment from Australia, as well as Japan, of active involvement in any war with China.
Washington’s provocative intervention underlines the fundamental contradiction and tightening squeeze confronting the Labor government and the Australian ruling class as a whole. They depend intensely on China, which accounts for a third of Australian exports, for profits and government revenue. But despite being an imperialist power itself, Australia relies heavily on the US for military support and foreign investment, as it has since World War II.
Treasurer Jim Chalmers tried to play down the jobless result. He described it as merely a “tick-up in the unemployment rate,” which was the “inevitable consequence of economic uncertainty and volatility” around the world and “the ongoing impact of higher interest rates.”
This is a coverup. In the first place, Labor and the Reserve Bank of Australia (RBA), which kept its official interest rate on hold at a high level of 3.85 percent this month, have a policy of driving up unemployment enough to suppress workers’ demands for increased wages to survive the ongoing cost-of-living crisis.
The 4.3 percent official unemployment rate is still below the 4.5 percent jobless rate that the central bank estimates is the “non-inflationary rate of full employment”—that is the level needed to further drive down real wages.
That is why prices on the Australian share market rose yesterday, celebrating the jobless rate news. That reflects investors’ expectations of grinding down workers’ wages, accompanied by calculations that the RBA will marginally reduce interest rates next month.
Prominent job destruction is taking place already.
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More than 3,000 academic and administrative jobs are being eliminated by universities across the country as a direct result of the Labor government’s slashing of international student enrolments and other funding pressure to align with Labor’s pro-corporate and war agenda.
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On July 9, Telstra, the privatised telecommunications company, announced it is cutting 550 jobs from its 31,000-strong workforce this year, on top of eliminating 2,800 jobs last year, and intends deeper cuts by 2030. In 1980, before Labor and Liberal-National governments sold it off, Telstra (then Telecom) had a workforce of around 90,000.
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BAE Systems, the weapons and ship building company, is cutting over 150 jobs at the Henderson military-related precinct, near Perth, Western Australia.
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Microsoft will cut 120 Australian jobs as part of 9,000 global cull from its global workforce of 228,000.
The jobs toll will also rise because about 80 percent of the jobs added over the past two years have been in the public sector or government-subsidised industries, including healthcare, aged care and childcare. These and other social programs, such as National Disability Insurance Scheme (NDIS) disability services, will be increasingly cut back as the government boosts military spending.
The Albanese government has vowed to expand military outlays from 2 percent to 2.3 percent of gross domestic product (GDP). But this is dwarfed by the Trump administration’s demands, delivered by Defence Secretary Peter Hegseth at the Shangri-La Dialogue in Singapore in May, for an increase to 3.5 percent “as soon as possible” to prepare for a possible “imminent” war against China.
That would mean spending an estimated $210 billion more over the next decade, in addition to the $368 billion allocated for the AUKUS nuclear-powered attack submarines for use against China.
Recent accidentally released parts of the Treasury Department’s briefing for the Albanese government after it won the May 3 election warned of a “worst case” Trump-related scenario. It included the US dollar losing its global dominance, a “severe downturn” and the necessity for corporate bailouts and “liquidity support” for the financial system, as occurred in the 2008‒09 global financial crisis.
The briefing also insisted on the need for deeper spending cuts and higher indirect taxes, most likely the regressive Goods and Services Tax, to further reduce corporate and income taxes for the wealthy and eliminate projected budget deficits.
This blueprint underscores the content of next month’s “Economic Reform Roundtable” to which Albanese and Chalmers have invited business and Australian Council of Trade Unions (ACTU) chiefs, essentially to discuss how to impose such measures on the working class.
Despite the union apparatuses’ vastly reduced membership and legitimacy in the eyes of workers after decades of sellouts and agreements to repeatedly axe workers’ jobs, real pay and conditions, the Labor government is relying heavily on them to police the agenda of austerity and war. Explosive class struggles lie ahead as the job toll rises.