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.
The flexibility of labour supply 3. The effectiveness with which people are matched with job vacancies 4. Trends in wages growth. Unemployment and underemployment The conventional measure of spare capacity in the labour market is the gap between the actual unemployment rate and the unemployment rate associated with full employment.