29 August 2023: The Australian labour market barely missed a beat in the first half of 2023. Despite a pullback in July, over the past three months the number of employed Australians grew by 93,200 workers and the unemployment rate remains low at just 3.7%.
Releasing the August 2023 edition of the Employment Forecasts report, Deloitte Access Economics partner and lead author, David Rumbens, said: “Part of the reason why the labour market has continued to grow is because labour supply has been increasing.
“Record net migration levels have helped to fill unmet labour demand with job vacancies consistently falling for the past year. Even with the fall, total vacancies remain high suggesting there are still many opportunities in the labour market.
“Fortunate timing, as many Australians have been able to use the tight conditions to their advantage to deal with cost-of-living pressures, such as negotiating more hours, working a second job, or simply having the opportunity to enter the workforce.
“Although pockets of employment growth are still likely, recent indicators suggest that broader economic weakness is finally creeping into the labour market, meaning there may be less opportunity for workers to negotiate on pay and conditions that have helped many households navigate inflationary pressures.”
Deloitte Access Economics expects the unemployment rate will increase to 4.5% by mid-2024 and the labour force participation rate will have peaked by the end of 2023.
Rumbens said keeping people employed was vital to helping families deal with cost of living pressures, and changes to government policy will be central to making this happen.
“The federal government’s pending Employment White Paper will commit the country to achieving full employment – albeit an official definition of full employment is still to be decided. This will be ambitious, as it should be, and if achieved, could deliver significant and ongoing social and economic benefits.”
Looking ahead, Deloitte Access Economics expects national employment to grow by 1.4% (190,400 workers) in 2023-24 and 1.0% (141,900 workers) in 2024-25 – a significant slowdown from the 4.1% growth (543,600 workers) experienced during 2022-23. And the sector outlook will reflect the increasingly challenging domestic economic conditions, with retail, utilities, and construction employment expected to be hit hardest by the downturn.
The high share of blue collar workers in the construction industry means the blue collar workforce will likely bear the brunt of the labour market slowdown, with a decline of 0.5% (18,800 workers) in 2023-24.
The outlook might be pessimistic, but there are still pockets of employment growth expected. The human services workforce is forecast to grow by 2.3% (117,800 workers) in 2023-24, supported by ongoing strength in service-based industries such as health care, education, and accommodation & food services.
Deloitte Access Economics also expects CBD employment growth to moderate to 1.9% (29,500 workers) in 2023-24 –outpacing national employment growth in the year ahead. In terms of CBD markets, Canberra is expected to drive CBD employment growth in 2023-24. But gains will in large part depend on the pace of new hiring within the federal government as the public sector workforce is set to expand.
Employment Forecasts is released quarterly and provides forecasts and commentary for each industry, plus white collar, blue collar and human services employment. There are three levels of data available: state, city and CBD. Employment Forecasts is particularly useful in the analysis of property market demand.