Are Skills Shortages a Constraint on Increasing Employment in Australia?

Abstract

The theme of this Policy Forum is ‘Full Employment in Australia’. One of the main questions to be considered is whether we are already at full employment, or whether we can further reduce unemployment and underemployment. The unemployment rate, at 4.3 per cent seasonally adjusted (May 2008), is low by the standards of the past three decades, but still above the levels of the 1950s and 1960s. McDonald (2007) argues that the unemployment rate can be further reduced to 2.5 per cent before Australia is at full employment. In this article, we leave the question ofwhether Australia is at full employment or not to others in this Forum, and instead focus our attention on the contention that skills shortages are a constraint on further increasing employment in Australia.