The Federal Government is set to redefine the concept of “full employment”.

The government’s new Employment White Paper emphasises the need to broaden the definition to encompass underemployment, aiming to drive down structural unemployment and maintain low overall unemployment rates. 

The government acknowledges that the current definition of full employment is too narrow and fails to account for underemployment and under-utilisation issues across the country. To rectify this, policymakers intend to redefine full employment to reflect the modern labour landscape.

The redefined concept of full employment is expected to complement existing monetary policy without affecting the independence of the Reserve Bank. 

The government aims to use various policy tools to remove barriers to work, provide skill acquisition opportunities, and ensure secure and well-paying jobs for Australians.

RBA governor Michele Bullock has endorsed the government's new definition of full employment.

The new objective for full employment has two components: sustained full employment and inclusive full employment.

 Sustained full employment focuses on reducing economic volatility and keeping employment near its maximum sustainable level, consistent with low inflation. Inclusive full employment aims to broaden labour market opportunities, lower employment barriers, and reduce structural under-utilisation over time.

The government says understanding and measuring these concepts accurately can prevent policy mistakes. Achieving full employment should involve considering the real challenges workers face in the labour market.

 While the government seeks to broaden the concept of full employment, it also aims to avoid interfering with the Reserve Bank's monetary policy decisions. 

It plans to use available tools to lower employment barriers for potential workers and reduce structural unemployment in the long term.

The Employment White Paper outlines 31 policy reform directions to guide government policymaking and the efforts of various stakeholders, including industry, unions, and education institutions.

The government has already announced nine immediate steps to drive its new employment agenda. These steps include promoting higher apprenticeships in key areas, extending the Work Bonus measure for older pensioners and veterans, and smoothing the transition to work for income support recipients.

Beyond these immediate actions, the government intends to make more substantial changes to Australia's workplace relations system, including addressing gender equality and job security. 

It also plans to reform employment services and ensure strong stewardship of the system to protect individual rights and dignity.