Key Highlights

  • The employment-to-population ratio was 63.8 per cent in the September quarter.
  • The Unemployment rate has drifted higher even as employment rises.
  • The RBA still describes employment as growing.
  • The unemployment rate alone does not capture how many working-age people have jobs.

The unemployment rate gets most of the attention. But it answers a narrow question: of the people who are working or looking for work, what share cannot find a job? It says nothing directly about how many people in the population as a whole are actually employed.

That is the Job of the employment-to-population ratio. According to the economic conditions chapter of the Reserve Bank of Australia's November 2026 Statement on Monetary Policy, the ratio was 63.8 per cent in the September quarter. Put plainly, close to two in every three Australians of working age had a job.

The figure is one reason the RBA's assessment of the labour market reads as softening rather than collapsing. As the Bank's economic conditions chapter puts it, "employment growth held up in the September quarter as expected."

Why the ratio is a useful cross-check

The employment-to-population ratio has a useful property: it is not affected by decisions to join or leave the labour force in the same way the unemployment rate is. If a person who had stopped looking for work starts searching again but has not yet found a job, the unemployment rate rises. The employment-to-population ratio does not change, because the number of employed people has not changed.

That matters right now. The RBA says unemployment rose by more than anticipated in the September quarter partly because more people were joining or staying in the labour force. The participation rate — the share of the working-age population that is employed or looking — averaged 66.9 per cent, above the Bank's expectations.

In that environment, the unemployment rate on its own can paint an incomplete picture. Unemployment averaged 4.6 per cent in the September quarter, above the 4.4 per cent the RBA forecast in August, and was 4.7 per cent in September. The employment-to-population ratio adds the other side of the story: a large share of the population remains in work.

It can help to see the three key labour measures from the September quarter together:

  • Employment-to-population ratio: 63.8 per cent. The share of the working-age population with a job.
  • Participation rate: 66.9 per cent. The share working or actively looking for work.
  • Unemployment rate: 4.6 per cent (quarterly average). The share of the labour force without a job.

The three are linked. The difference between participation and the employment-to-population ratio — about 3.1 per cent of the working-age population — is the group counted as unemployed. Expressed as a share of the labour force rather than the whole working-age population, that group is the unemployment rate.

What "still working" does and does not mean

The Monetary Policy Board's statement captured the dual nature of the labour market on 3 November: "Employment is expected to continue to grow, but the unemployment rate is projected to rise by more than expected in the August forecasts."

So the economy is still adding jobs, and a high share of the population is employed. At the same time, the number of people looking for work without success is rising. Both statements are true, and the employment-to-population ratio is the measure that keeps the first part visible.

There are limits to what a single ratio can show. The Statement material available does not break the 63.8 per cent down by age, gender or hours worked, nor does it compare the figure with earlier periods. The ratio also counts anyone with a job, regardless of whether they would prefer more hours. It is a measure of how many people are working, not of how secure or well paid that work is.

Why the RBA watches it closely

For a Central Bank with a dual mandate, the employment-to-population ratio speaks directly to one half of it. The Board's statement said "the Board is focused on its mandate to deliver price stability and full employment."

A high share of people in work, combined with weak productivity growth, also feeds into the RBA's view that the economy has limited spare capacity. Governor Michele Bullock told the Senate Economics Legislation Committee on 28 October that "continued weak productivity growth means that the economy cannot grow strongly without putting pressure on inflation." The Bank's liaison contacts report elevated wage expectations, and the RBA has revised its wage price index forecasts higher, to 3.4 per cent for December 2026.

That backdrop helps explain why the Board raised the cash rate target by 25 basis points to 4.85 per cent despite the rise in unemployment. Inflation remains the central concern: headline CPI was 3.9 per cent and trimmed-mean (underlying) inflation 3.7 per cent over the year to the September quarter, and the monthly headline CPI indicator was 4.3 per cent over the year to September 2026. The decision was by majority, six votes to three, and the statement gives no reasons for the minority view.

Looking ahead

The RBA's forecasts — conditioned on a cash rate path based on market pricing as at 28 October 2026 — have unemployment rising to 4.7 per cent by December 2026 and 5.1 per cent by December 2028. The Bank expects growth to remain below trend, with weaker housing and the higher assumed cash rate path a key reason for lower GDP growth from mid-2027.

The Statement does not publish a forecast for the employment-to-population ratio in the material available here. But with employment expected to keep growing while unemployment rises, the gap between the ratio and the participation rate is likely to be a measure worth watching as new data arrive. In its downside scenario, where households and businesses respond more strongly to oil prices, interest rates and falling house prices, the RBA sees unemployment 0.3 percentage points higher by end-2028.

The bottom line

The employment-to-population ratio of 63.8 per cent in the September quarter is the labour market number that supports the RBA's description of employment that is still growing. It shows that a large share of working-age Australians remain in jobs, even as a rise in participation has pushed the unemployment rate above the Bank's August forecasts. Read together, the two measures describe a labour market that is softening at the edges rather than shedding jobs outright — with the RBA expecting further gradual increases in unemployment from here.