Key Points:

  • Australia’s labour market remains tight by historical standards, though imbalances between labour demand and supply eased somewhat throughout 2024.
  • Employment gains are increasingly driven by government and non-market industries, reflecting a challenging economic environment for private businesses. 
  • Australian labour productivity continued to decline in 2024, with the workforce now only as productive as it was seven years ago. 
  • Pay transparency continues to rise across Australia, with 37% of job postings featuring pay information by the end of 2024. 

Labour market overview

Australia’s labour market remained undeniably tight in 2024, almost in defiance of an otherwise challenging economic environment. Imbalances between labour demand and supply persisted  — reflected in widespread skill shortages and higher-than-normal job vacancies — but narrowed somewhat throughout 2024. 

Here are some of the highlights from the past year:

  • The unemployment rate remains at 4.0%, practically unchanged since the beginning of the year.
  • Australian employment increased by around 444,400 people over the past year, with two-thirds of these gains in full-time employment. 
  • Australia’s employment-to-population ratio reached a record high of 64.5% in December.  
  • Wage growth eased to 3.5% in the September quarter from a peak of 4.3% in the December quarter 2023, though cost-of-living pressures remain significant following a sharp decline in inflation-adjusted wages.
  • Job vacancies declined 10.3% over the year but remained 51% above pre-pandemic levels.
  • Australia’s working-age population — those aged 15 and over — increased by 2.4% over the past year, remaining incredibly high by historical standards. 

Can Australia continue to defy expectations in 2025? It’s certainly possible, particularly given the ongoing strength in Australian job postings — vacancies that, when filled, will boost Australian employment — and the increasing likelihood that the Reserve Bank of Australia will begin cutting interest rates. A fiercely contested federal election this year will add some economic uncertainty, though potential election promises may support some job creation later in the year. 

Australia’s labour market remains tight

The past year was surprisingly uneventful from a labour market perspective. Despite predictions of a rise, the unemployment rate ended the year largely unchanged at 4.0%. In November, the Reserve Bank of Australia anticipated the unemployment rate rising to 4.5% by the end of 2025, but that forecast may get revised lower based on current trends.

Line graph titled “Australian unemployment rate.” With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was 4.0% in December, with the latest RBA forecasts pointing towards an increase to 4.5% in 2025. 
Line graph titled “Australian unemployment rate.” With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was 4.0% in December, with the latest RBA forecasts pointing towards an increase to 4.5% in 2025. 

Australia’s employment-to-population rate broke records in 2024, peaking at 64.5% in December. While the measure’s uptrend in recent decades has been driven primarily by women and older workers, growth in 2024 came from a more surprising source: men. 

In December, 68.5% of Australian working-age men were actively employed, up 0.7 percentage points since the beginning of the year, and the highest level since early 2012. By comparison, participation by women rose 0.3 percentage points to 60.5%, after reaching a record high earlier this year.

Looking forward, an ageing population will continue to weigh on Australia’s employment-to-population ratio — as it has for many years — but in the near-term, that might be outweighed by strong migration and the impact that cost-of-living pressures have had on Australian households. The latter, in particular, represents a temporary boost to employment that might begin to unwind in coming years if cost-of-living pressures subside. 

Line graph titled “Australian employment-to-population rate.” With a vertical axis ranging from 50 to 70%, this ratio reached a record high of 64.5% in December, driven by strong gains in male employment. 
Line graph titled “Australian employment-to-population rate.” With a vertical axis ranging from 50 to 70%, this ratio reached a record high of 64.5% in December, driven by strong gains in male employment. 

Job postings stabilised in 2024 and remain elevated

Overall, competition for talent remains elevated and well above pre-pandemic levels.

On 31 December 2024, Australian job postings on Indeed were down 5.2% compared to the beginning of the year, with postings now 54% above its pre-pandemic baseline (compared to +63% at the beginning of the year).

Job creation in Australia continues to compare favourably with its global peers, with job postings up only 10.6% in the United States and 1.3% in Canada, and down 13.7% in the United Kingdom, compared to its pre-pandemic baseline. Australia also compares favourably to our friends across the Tasman, with New Zealand job postings declining 26% in 2024, down 11.2% from pre-pandemic levels. 

Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, where 1 February 2020 is indexed at 100, Australian job postings were 54% above their pre-pandemic baseline at the end of 2024. 
Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, where 1 February 2020 is indexed at 100, Australian job postings were 54% above their pre-pandemic baseline at the end of 2024. 

While job postings remain elevated across the country, there is growing regional variation. The strongest states, including Queensland, South Australia and Western Australia, have job posting levels that are either double or near-double pre-pandemic levels. These states have also experienced a relatively modest drop in job postings from their peak, down just 10% and 19% in South Australia and Queensland, respectively. 

And then we have the likes of New South Wales and Victoria, where postings have fallen 40% and 46% from their peak, respectively. Overall demand in these two states is still quite strong, up 40% in New South Wales and 33% in Victoria compared to their pre-pandemic baseline, but nowhere near as strong as observed elsewhere.  

Bar graph titled “Australian job postings by state.” With a vertical axis ranging from 0 to 4, where 1 February 2020 is indexed to 1, job postings in Queensland and South Australia are around double their pre-pandemic baseline. 
Bar graph titled “Australian job postings by state.” With a vertical axis ranging from 0 to 4, where 1 February 2020 is indexed to 1, job postings in Queensland and South Australia are around double their pre-pandemic baseline. 

The government is driving employment growth

Still, despite an incredibly tight labour market, by other measures, Australia’s overall economic performance has hardly set the world on fire recently, a trend that is readily apparent when looking at the industries driving job growth. 

Over the past year, around 83% of employment gains came from non-market industries,  including healthcare & social assistance, education and public administration & safety. Jobs in these government-aligned non-market industries increased by 391,000 over the past year, representing the bulk of the 473,000 total job gains over the same period. 

Non-market industries are often less sensitive to market forces, either because they are public sector organisations or because they are influenced by public sector financing decisions. The healthcare and education sectors are two obvious examples. As a consequence, they have been insulated to some degree from an otherwise difficult economy, and that’s increasingly reflected in hiring trends.

Bar graph titled “Australian jobs growth.” With a vertical axis ranging from -6 to 9%, Australian employment growth remains strong, but growth was increasingly government-driven during 2024. 
Bar graph titled “Australian jobs growth.” With a vertical axis ranging from -6 to 9%, Australian employment growth remains strong, but growth was increasingly government-driven during 2024. 

By comparison, the private sector drove job gains early in the post-pandemic jobs boom. Right now, Australian job creation has been underwritten by the public sector, particularly via healthcare & social assistance, which by itself accounts for 57% of job gains over the past year. 

In 2025, government spending should remain high, particularly given the upcoming federal election, and hiring in government-adjacent sectors may remain strong as a result. But even a modest reduction in the rate of job growth could see Australia’s record-breaking job boom come to an abrupt halt. 

Australia’s dismal productivity growth

Australian labour productivity, measured as GDP per hour worked, continued to disappoint throughout 2024. Productivity is now 5.7% below its peak in the March quarter of 2022, after declining by 0.9% in the June quarter and a further 0.4% in the September quarter. Remarkably, Australia hasn’t experienced any labour productivity gains in the past seven years. 

The long-term slowdown in productivity growth has been attributed to factors ranging from an ageing population and reduced business dynamism to reduced technological progress and even hangover impacts from the global financial crisis. 

The post-pandemic decline has more commonly been attributed to compositional changes in employment towards lower-productivity industries (including non-market industries), supply-chain disruptions, subdued business investment and low levels of competition across many industries. Even remote work could be a factor. 

Line graph titled “Australian GDP per hour worked.” With a vertical axis ranging from 50 to 110, where 2022-23 average is indexed to 100, Australian labour productivity has now fallen 5.7% from its peak in the March quarter 2022. 
Line graph titled “Australian GDP per hour worked.” With a vertical axis ranging from 50 to 110, where 2022-23 average is indexed to 100, Australian labour productivity has now fallen 5.7% from its peak in the March quarter 2022. 

Whatever the source of Australia’s dismal productivity performance might be, turning it around will be critical to improving wages, living standards and the nation’s long-term economic health. Failing to improve productivity growth could also have an unwelcome impact on inflation and interest rates. As the Reserve Bank of Australia noted in their November Statement on Monetary Policy, “if low productivity growth persists over the next couple of years, inflation could take longer to return to target.

Cost-of-living pressures will remain a problem

While inflation eased considerably throughout 2024, that doesn’t mean that cost-of-living pressures will disappear. Over the past year, Australian wages rose by 3.5%, tracking ahead of the 2.9% increase in consumer prices. Government subsidies, particularly regarding electricity, have helped drive measured inflation towards the RBA’s 2-3% inflation target. 

Line graph titled “Australian wage growth and inflation.” With a vertical axis ranging from -2 to 8%, Australian wage growth was slightly higher than inflation throughout 2024, following a lengthy period of elevated inflation. 
Line graph titled “Australian wage growth and inflation.” With a vertical axis ranging from -2 to 8%, Australian wage growth was slightly higher than inflation throughout 2024, following a lengthy period of elevated inflation. 

Yet don’t be fooled. Cost-of-living pressures will continue to weigh heavily on Australian households over the next couple of years. Based on the latest RBA forecasts, inflation-adjusted wages are expected to barely change over 2025 and 2026, remaining around levels last seen about 13 years ago. 

And if Australian productivity growth doesn’t improve, don’t be surprised if employers start to push back against higher wages sooner rather than later. 

Line graph titled “Australian inflation-adjusted wages.” With a vertical axis ranging from 90 to 110, where the 2010 average is indexed to 100, Australian inflation-adjusted wages have declined significantly from their peak and aren’t expected to grow meaningfully in 2025 or 2026. 
Line graph titled “Australian inflation-adjusted wages.” With a vertical axis ranging from 90 to 110, where the 2010 average is indexed to 100, Australian inflation-adjusted wages have declined significantly from their peak and aren’t expected to grow meaningfully in 2025 or 2026. 

Pay transparency continues to gradually rise

Pay transparency in Australia continues to gradually improve, with 37% of Australian job postings featuring pay information at the end of 2024, up from 35% at the end of last year and just 21% five years ago. 

Line graph titled “Pay transparency in Australia.” With a vertical axis ranging from 0 to 40%, around 37% of Australian job postings featured pay information in December 2024, up from 35% a year earlier. 
Line graph titled “Pay transparency in Australia.” With a vertical axis ranging from 0 to 40%, around 37% of Australian job postings featured pay information in December 2024, up from 35% a year earlier. 

Regional pay transparency varies from just a third of job postings in Victoria to almost half of job postings in Tasmania. Compared to a year earlier, pay transparency in 2024 increased in most states, most notably in Western Australia and South Australia, with transparency down slightly in New South Wales and our nation’s capital. 

Dot graph titled “Pay transparency in Australian states.” With a vertical axis ranging from 0 to 60%, pay transparency ranges from 33% in Victoria to almost 50% in Tasmania in 2024. 
Dot graph titled “Pay transparency in Australian states.” With a vertical axis ranging from 0 to 60%, pay transparency ranges from 33% in Victoria to almost 50% in Tasmania in 2024. 

Pay transparency also varies considerably across occupational categories. In 2024, pay transparency was most common in personal care & home health — where almost 70% of job postings featured pay information — ahead of beauty & wellness (65%), therapy (63%), nursing (61%) and childcare (60%). By comparison, just 11% of insurance postings, 19% of industrial engineering and retail roles, and 22% of sales opportunities featured pay information. 

A tight labour market has likely contributed to rising pay transparency, with some employers using pay information to stand out from their peers in a competitive job market. Labour market conditions will likely determine whether pay transparency will continue to rise in 2025. If the job market remains tight, with talent hard to find, pay transparency may increase further this year.

Australia’s layoff rate is still low, but rising

As of November, around 1.4% of Australia’s labour force had lost their last job — in other words, they were laid off or made redundant. While Australia’s layoff rate has gradually increased — from a low of 1% in the second half of 2022 — it remains well below the 1.8% layoff rate that prevailed immediately prior to the pandemic, and the 2% average rate from 2010 to 2019. 

It’s another measure that highlights both the strength and resiliency of Australia’s job market. In an economic downturn, which Australia is currently experiencing, we’d typically expect to see a spike in layoffs across major employers, but that hasn’t yet eventuated. 

We expect the layoff rate to continue to normalise in 2025 towards pre-pandemic levels, considering that the current layoff rate is at levels usually associated with a robust economy. 

Line graph titled “Australian layoff rate.” With a vertical axis ranging from 0 to 4%, around 1.5% of Australia’s labour force lost their last job. While that number is trending higher, it still remains well below pre-pandemic levels. 
Line graph titled “Australian layoff rate.” With a vertical axis ranging from 0 to 4%, around 1.5% of Australia’s labour force lost their last job. While that number is trending higher, it still remains well below pre-pandemic levels. 

Keep an eye on GenAI in 2025

GenAI will undeniably be one of the biggest labour market trends of 2025. In 2024, there was rapid growth in GenAI usage across Australia, with the share of Australian job postings mentioning GenAI almost quadrupling from 0.06% at the end of 2023 to 0.22% by the end of 2024. 

While GenAI usage remains concentrated in the tech sector, where the GenAI posting share is around 11 times higher than in non-tech sectors, we continue to see strong growth in non-tech GenAI postings. By the end of the year, 0.14% of non-tech postings mentioned GenAI in their job descriptions, almost five times higher than the end of 2023. 

Two-panel line graph titled "Australian generative AI postings." With a left-hand vertical axis ranging from 0 to 0.25% and a right-hand vertical axis ranging from 0 to 2%, the share of Australian job postings mentioning GenAI has increased sharply for both tech and non-tech roles during 2024. 
Two-panel line graph titled “Australian generative AI postings.” With a left-hand vertical axis ranging from 0 to 0.25% and a right-hand vertical axis ranging from 0 to 2%, the share of Australian job postings mentioning GenAI has increased sharply for both tech and non-tech roles during 2024. 

Predicting the future of GenAI is awfully challenging, but we can be reasonably confident that Australian employers will continue to invest in these tools, transforming workplaces nationwide. It would be very surprising if, by the end of 2025, the share of Australian job postings mentioning GenAI wasn’t considerably higher than it is today. 

Conclusion

Australia’s labour market remains tight, with unemployment low and participation in the workforce high. This continues to be a record-breaking job market, as it was throughout 2022 and 2023, and it has proved far more resilient than even the most optimistic economist might have expected. 

Can that continue in 2025? Certainly, there are plenty of jobs waiting to be filled. But some concerns, such as the overreliance on government-driven job growth and dismal productivity, underline the need for broader economic improvement. 

A weak economy hasn’t impacted employment growth much thus far, perhaps a consequence of employers operating well below staffing needs throughout 2022 and 2023, but it would be foolish to think that this dynamic is sustainable going forward. 

Given that, it’s probably good that Australia has a federal election this year, and the Reserve Bank of Australia is expected to cut interest rates, both of which may help get the economy back on track in 2025.