Deloitte’s latest employment forecasts report says that Australia’s economy “is at a critical juncture” following two years of rate hikes from the RBA.
Deloitte noted that the economy is “stagnating and growing at its slowest rate (outside of the pandemic) since the early 1990s recession”, which is “finally bleeding through to the labour market”.
Most worryingly, private sector employment has ground to a halt:
“Although employment has been growing at a healthy rate over 2024, employment gains in the year to March 2024 came from almost entirely the non-market sector”.
“As a result, non-market sector employment grew by 7.6% in the year to March 2024, compared to just 0.1% growth from market sector industries”.
“Other indicators also highlight weaknesses in the labour market: job vacancies, job mobility and average hours worked are down, and job security fears are rising”, Deloitte notes.
Deloitte projects that Australia’s employment growth will slow to 1.0% in 2024-25 (or 147,400 additional jobs), well down from 3.1% jobs growth in 2023-24 (423,600 additional jobs).
Given the labour force continues to grow at a strong rate due to high immigration, Australia’s unemployment rate is projected by Deloitte to rise to 4.5% across 2024-25 (which would mean an additional 101,500 unemployed).
While an unemployment rate of 4.5% is still fairly low from a historical perspective, the private sector is expected to bare the brunt of the slowdown.
In particular, “2024-25 looks bleak for white collar employment, with a 0.4% or 23,500 worker decline projected”, says Deloitte.
By contrast, “the focus on non-market employment plays well for human services, with employment growth of 1.9% or 96,700 workers expected in 2024-25, tracking steadily to 1.3% growth in 2025-26”.
Separately, Robert Half director Nicole Gorton told ABC News that the private sector has entered an external hiring freeze.
“Companies are focusing, at the moment, more on their retention strategy than attraction”, she said.
Government spending is currently supporting Australia’s economy and labour market, which is offsetting the contraction of the private sector.
