Australia: Raise labour supply
Output growth, which could reach 4.25% in 2007, is expected to slow gradually to 3.5% in 2008 and 3% in 2009, a pace close to the potential growth rate. This slowdown, which will be accompanied by a further tightening of monetary policy to keep inflation in line with the Reserve Bank’s inflation target, should ease strains in the labour market.
Prudent budget management, while allowing the automatic stabilisers to operate, would also help moderate the pressures on capacity that may be heightened by the announced tax cuts. Given that demand could remain brisk over the medium term, it is important to continue efforts to stimulate labour supply, especially with respect to skilled labour, and preserve job market flexibility.
No. 264/265, December/January 2008
• OECD Economic Outlook No. 82, December 2007
• Visit www.oecd.org/australia
• All OECD Observer articles on Australia