Victoria's unemployment rate tops nation despite tens of thousands of new jobs

Victoria created almost 100,000 jobs in the past year, yet the state's unemployment rate is the nation's highest.

New data from the Australian Bureau of Statistics delivered mixed signs for the health of the Victorian economy, with employment growth at 3.2 per cent for the year to August.

Fifty level crossings are being removed across Melbourne.  Photo: Jason South

Fifty level crossings are being removed across Melbourne. Photo: Jason South

The number of employed people in Victoria grew by 96,800 in the past year, the most of any state, including a surge of 18,600 jobs in August.

But the state's unemployment rate sat at 6.1 per cent last month.

Seasonally adjusted, it was the highest unemployment rate in Australia. 

The opposition said the figures were a "wake-up call" that Victoria's economy was slipping behind other states. 

"Daniel Andrews' boasts about new jobs ring hollow, as they have fallen well short of keeping up with our state's population growth," shadow treasurer Michael O'Brien said.

"Since the last election, Victoria's population has grown by well over 300,000 but job growth has failed to keep pace."

Treasurer Tim Pallas said the Andrews government was driving employment growth through its heavy investment in infrastructure, including the removal of level crossings and the Metro rail tunnel. 

"More jobs for Victorians means more money in people's pockets and less people out of work," Mr Pallas said.

"This is about putting people first and ensuring that we are working hard to create the jobs and infrastructure needed."

The national unemployment rate is at 5.6 per cent, and the rate of underemployment – those who have some work but would like more – is at 8.7 per cent.

Underemployment has been linked to Australia's stubborn low wages growth.

"The underemployment rate is an important indicator of the spare capacity of workers in Australia, and it has remained at 8.7 per cent, a historical high, for the third consecutive quarter," chief economist for the bureau, Bruce Hockman, said.