such as our first nations australians. these structural issues – which are a focus of the australian government ’ s employment white paper – are beyond the ability of monetary policy to address. monetary policy ’ s primary role in supporting full employment over the longer term is to ensure that inflation remains low and stable. although, as i hinted at earlier, it may have some impact at the margin if a strong labour market permanently lowers the unemployment rate that we typically associate with full employment. developments in recent months in recent months, the balance between labour demand and supply has improved somewhat as the sharp increase in net arrivals from overseas may have helped to alleviate shortages in some areas and labour demand has moderated as the post - pandemic recovery has run its course. the significant tightening in monetary policy over the past year has also played a role in this, as intended. this moderation in labour demand can be seen in a range of indicators, such as job advertisements and employment intentions ( graph 9 ). the unemployment rate has also bottomed out, and there are signs that turnover is declining and labour shortages in some areas are easing. nevertheless, the labour market remains tight, with many firms still finding it challenging to hire workers and there are still roughly as many vacancies as there are unemployed people. graph 9 job ads and employment intentions likert score % 1. 0 2. 4 employment intentions * ( lhs ) 0. 5 1. 8 0. 0 1. 2 job advertisements * * ( rhs ) - 0. 5 - 1. 0 0. 6 0. 0 * over the year ahead ; smoothed using a 13 - month henderson trend. * * as a share of the labour force. sources : abs ; jobs and skills australia ; rba. monetary policy and full employment so, how do we think about full employment in the context of setting monetary policy? i noted at the beginning that, simply put, full employment means that people are able to find a job without having to search for too long. this does not mean an unemployment rate of zero. there will always be frictions in the labour market that mean it takes time to find a suitable job, including because the skills required do not match the candidates available or there are structural impediments to employment. these issues are best addressed by government policies. for monetary policy, our price stability mandate requires a narrower concept of full employment. we think of full employment as the point at which there is a balance between demand and supply in the

effects on employment that had been a hallmark of previous recessions. it is also possible that the particular nature of the pandemic recession – driven by health restrictions and social distancing – allowed for a faster recovery than previous recessions. r e s e r v e b a n k o f au s t r a l i a a remarkable recovery the pace and extent of the recovery has been remarkable – much faster than any previous downturn ( graph 2 ). [ 5 ] labour market outcomes over the past three years have consistently exceeded the expectations of the bank and other forecasters ; the labour market has proved very resilient. graph 2 labour market underutilisation * monthly change since the beginning of labour market downturn ppt ppt previous downturns covid - 19 pandemic - 3 - 6 - 3 * months - 6 the underutilisation rate is the sum of the unemployment and underemployment rates ; labour market downturn is defined as the trough in the underutilisation rate. sources : abs ; rba. the share of the australian population in employment has never been higher. the number of australians in a job has increased by over 1. 1 million since late 2021 and the level of employment is now almost 8 per cent above its pre - pandemic level. almost all the gains in employment since the onset of the pandemic have been in full - time employment ( graph 3 ). strong demand for labour has enabled many previously part - time employees to move into full - time work. this has allowed people to move closer to their preferred working hours, pushing the underemployment rate ( which captures both those looking for more work and those looking to increase their current hours ) to levels not seen since 2008. graph 3 employment cumulative change since february 2020 ’ 000 ’ 000 full - time part - time - 250 - 250 - 500 - 500 - 750 m j s d m j s d m j s d m j - 750 source : abs. the rate at which people participate in the labour force is also at a record high. the rise in participation since the onset of the pandemic is mostly attributable to women entering ( or re - entering ) the labour force in large numbers. this has been underpinned by strong labour market conditions, more flexibility in working arrangements and a continuation of long - run trends. the unemployment rate has fallen sharply and is currently a little over 3½ per