A new wave of female employment is coming to the rescue of the Aussie economy

Women in the Australian workforce are coming to the rescue of the economy, with official data showing a huge rise in employment numbers was significantly boosted by middle-aged women.

Housing affordability issues could be a key trigger behind the jump in the number of women in full-time employment, according to a senior Commonwealth Bank economist Kristina Clifton, who notes a clear relationship between housing affordability and jobs figures.

The Australian labour market soared in 2017, with 403,100 jobs created – almost four times as many as the previous year and the most on record – and the participation rate for women entering the workforce jumped 1.3 percentage points to a record high 60.6 per cent, compared with just 0.5 percentage points for men.

That rise, if sustained, could be enough to stave off a serious economic concern for the nation.

“If female participation continues to steadily trend higher over the next ten years, then this would be enough to offset the effects of the ageing population,” Ms Clifton said.

But while a strengthening labour market is welcome news for the Australian economy, the rise in female workers could partially be a result of ongoing housing affordability issues.

“Rising house prices and issues around housing affordability are also likely to be important factors that have encouraged an increase in female participation,” the CBA economist said, adding that tax paid on two smaller incomes is often lower than that of one large income.

“The data shows an inverse relationship between housing affordability and overall labour market participation. That is, as affordability worsens, participation increases.”

(Source: CBA economics)

The number of women in the workforce has been rising for decades, but flattened out between 2009 and 2015 as the end of the mining boom lead to a weaker labour market.

But a combination of improved parental leave and retirement policies, increasingly flexible work arrangements, and a broad shift toward less physically-demanding occupations have boosted female participation rates, according to Ms Clifton.

“A breakdown of female participation by age group shows that participation has risen over time in all age groups with the exception of those below age 15-24 years,” Ms Clifton said, with the younger group expected to be spending more time in higher education.

“The largest increase in female participation over time has been in the older age groups. For example, participation has almost doubled between 1990 and 2017 for woman ages 55-64 years.”

Meanwhile male labour force participation crept 0.5 per cent higher in 2017 from the record low reached at the start of the year, but has been declining over time.

Specifically, the fall in the number of employed middle-aged men could highlight a major trend in the workforce.

“A lot of the jobs being lost in the economy now are those that have traditionally been done by men,” Indeed chief Asia-Pacific economist Callam Pickering told Domain.

“We’re seeing a lot of jobs being lost in the mining sector and manufacturing – naturally jobs where you would expect to see a lot of 40-50 year old men. They’re losing their jobs and finding their skills aren’t as in-demand as they were in the past, so they’re finding it more difficult to get back into the workforce.”

Mr Pickering also commented on the economic pressure being relieved by the rising number of women in the workforce.

“The increase in female participation, if that continues, then it will help to offset much of the impact of an ageing population over the next five to ten years, which is a really positive development for the Australian economy. The ageing population is one of those big economic issues that a lot of people have been concerned about, and it has certainly weighed on the Australian economy somewhat.”

In additionally good news for the economy, Ms Clifton said she expects higher employment and participation will translate to an increase in household incomes and, as a result, spending – a core pillar of economic growth.

“More people in employment generally means higher household incomes, a particularly welcome development in the current climate of flat real wages growth.”