Prime Minister Anthony Albanese raised concerns about economic thinking that promotes job losses as a tool to curb inflation. His comments appear at odds with previous Reserve Bank statements suggesting that a higher unemployment rate may be needed to meet inflation targets.
Speaking at the opening of a major economic summit involving the federal government, business leaders, unions and economists, Albanese highlighted that the current unemployment rate is 4.2% compared to 3.4% in 2022. He said inflation has eased without causing significant job losses. In contrast, the Reserve Bank has previously estimated the unemployment rate may need to rise to about 4.5% to reduce inflationary pressures sustainably.
Although the prime minister’s office denied that his comments targeted the RBA governor, the timing and nature of his remarks led many attendees to believe otherwise. The central bank has indicated that to bring inflation within target, the economy may need to tolerate a moderate increase in unemployment based on assumptions of sustainable full employment. Albanese argued that his government’s policy aims to protect jobs while ensuring overall economic stability.
So far under the current government, almost 1.2 million jobs have been created as inflation has moved closer to the RBA’s preferred range. Much of this employment growth has occurred in publicly funded sectors such as healthcare, education and aged care. However, business groups warn that growing wages across these sectors could place additional pressure on inflation, a concern raised during the summit.
The discussion reveals a deeper divide between economic perspectives - with one side favouring job creation and wealth equity and the other focusing on price stability even if it risks higher joblessness. This debate is likely to continue as Australia manages shifts in inflation and the labour market.
