And a critical influence on wage outcomes is the balance between supply and demand in the labour market; or in other words how much spare capacity is there in the labour market? This question is closely linked to the one about what constitutes full employment.
So, it is natural that we focus on the labour market as the Board makes its monthly decisions about interest rates. Spare Capacity With that background I would now like to discuss how we assess the degree of spare capacity in the Australian labour market. I will do this from four perspectives: 1. The rates of unemployment and underemployment 2.