Crucial support for strapped households starting to wobble

Deloitte Access Economics predicts that the unemployment rate, currently at a historically low 3.7 per cent, will increase and reach 4.5 per cent by mid-2024 - a year earlier than forecast by the central bank.

It expects employment growth to slow sharply to 1.4 per cent this financial year, down from 4.1 per cent in 2022-23, with the brunt of the downturn to hit retail, construction and utilities.

The anticipated slowdown will come at a difficult time for many households who have looked to higher wages, longer hours or an extra job to help them cope with rising housing costs and other expenses.

According to Deloitte, a record 950,000 workers currently have more than one job, most "out of necessity as wage growth is not enough to offset inflation pressures".

Report author David Rumbens said the workforce participation rate had reached near a record high 66.7 per cent, driven by a surge in the number of young people in work, "but momentum will likely slow from here".

This is likely to spell trouble for many as they try to cope with mounting living costs, he warned.

"There may be fewer opportunities for workers to negotiate the labour market benefits that have helped many households navigate inflationary pressures," Mr Rumbens said.

Many such workers are in the ACT.

According to the Australian Bureau of Statistics, 8.1 per cent of workers in Canberra hold down multiple jobs, the second-highest rate in the country, behind Hobart.

But Mr Rumbens said the ACT was likely to fare better than most other states and territories.

While the territory's unemployment rate has jumped since the end of last year, increasing by 1 percentage point to 3.8 per cent, "public sector demand is expected to contribute significantly to overall ACT economic growth in 2023-24," he said.

"A projected increase in Commonwealth employee expenses will disproportionately aid the ACT economy given the concentration of the federal public service in Canberra," the economist said.

Though a high proportion of Canberrans work extra jobs, ABS figures show the ACT has also experienced the equal largest increase in the rate of retirement in the country.

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According to the bureau, the ACT had 57,000 retirees in 2020-21 (the most recent period for which data is available), which equates to 37 per cent of all people in the territory aged 45 years or older - up from 43 per cent in 2018-19.

Across Australia, there were 4.1 million retirees in 2020-21 and the average age of retirement was 56.3 years, almost one year older than the average just two years earlier.

Agriculture workers tended to delay retirement the longest, with the average retirement aged close to 68 years, while those in IT and telecommunications, mining public administration and finance the most likely to retire earliest, with a average retirement age less than 65 years.

The retirement snapshot follows the release of the Intergenerational Report which predicted the number of those 65 years or older will double in the next 40 years, driving a big increase in demand for government funded health and care services.

At the same time, the government is expected to become increasingly reliant on personal income tax to pay for this increased spending.

The number of working age people for every person aged 65 years or older has been shrinking. The ratio is currently at around four to one but is projected to shrink to less than three to one in the next four decades.

The outlook has reinvigorated calls for tax reform, independent MPs, economists, business groups and think tanks urging the federal government to consider wide-ranging reforms including taxes of super profits, changes to the GST and property taxes and the introduction of a wealth tax.