Deloitte Access Economics Employment Forecasts

26 May 2025: Inflation is moderating, wages are tracking in line with RBA expectations, and interest rates are coming down to provide a further boost to jobs. From the outside, the labour market looks healthy - but that masks imbalances in where jobs are being generated, and an abysmal productivity performance.

Releasing the May 2025 edition of the Deloitte Access Economics Employment Forecasts report, Deloitte Access Economics partner and lead author, David Rumbens, said: “Last year saw the labour market continue to hum even as other economic indicators suggested recession-like conditions. In the past year almost 390,000 Australians found jobs, with around two thirds of these being full-time positions, highlighting the labour market's resilience. In April 2025 alone, employment surged by an additional 89,000 people.

“The unemployment rate has risen to just 4.1%, which is still well below Australia’s historical average. This marks one of the smallest increases in the unemployment rate following a major period of disinflation in Australia’s history.”

“The overall strength of the labour market has masked the relative strength of non-market sector employment compared to the market sector. In the year to the December quarter of 2024, the non-market sector (health care, education, public administration) accounted for approximately 80% of total employment gains.

“Beyond the labour market, the Australian economy is expected to strengthen in 2025. The labour market will benefit from this momentum, though businesses may be cautious about increasing hiring, opting instead to better utilise existing workers.

“Real wage growth appears to be recovering from the recent slump. Positive news for the recently re-elected Labor government, who view maintaining wage growth as a top priority. The sustainable way to maintain healthy wage growth is through productivity gains – something the Treasurer has recently nominated as being central to the Labor government's second term.”

Productivity in the spotlight

Australia’s labour market challenges are far more about the productivity of labour than creating the jobs themselves. Rumbens added: “Australian labour productivity has fallen considerably over the past three years. Since its peak in March 2022, Australia’s labour productivity has fallen by 5.7% and labour productivity in the non-market sector now sits at a near 20-year low, underscoring why boosting productivity growth should be a top priority for government.”

One of the solutions to this productivity dilemma could be at hand. Deloitte Human Capital Partner, Sarah Rogers said: “The use of generative artificial intelligence (GenAI) in the workplace is growing rapidly across many businesses, with potential implications for productivity.

“Integrating Deloitte’s Work Analyser tool with the Employment Forecasts occupation projections demonstrates the potential labour savings from the growing use of GenAI across industries and occupations. Some of this may be pure efficiency saving, though in many cases the time freed up will allow for a higher quality of work, or new work, to be performed, enhancing the desirability of the occupation.

“For example, the role of AI for professionals is enormous. There are large opportunities for automating or augmenting routine tasks and creating worker efficiencies across many occupations. This will likely redefine many professional roles in the year ahead, and organisations need to rethink work, skills, teams and jobs to capture these gains. Alignment of technology and workforce strategies has never been more important.”.

What’s in store for Australia’s labour market in calendar year 2025?

Overall, the pace of employment growth is forecast to slow to 1.5% (218,800 workers) in 2025-26 as public spending slows and net overseas migration trends downwards.

“All sectors are expected to benefit from the gradual economic upturn, with consumer-facing industries poised for growth due to the combined effects of tax cuts, government rebates, and anticipated cuts to interest rates,” Rumbens said.

How does that play out by broad worker classification?

• The focus on non-market employment plays well for the human services workforce which is expected to notch up another year of solid growth, supported by health care, education, and public admin, along with a rebound in accommodation and food services employment as consumer spending picks up. The human services workforce is expected to grow by 4.1% (212,400 workers) in 2024-25 and a further 2.7% (146,000 workers) in 2025-26, well above the total workforce average.

• Employment growth for white collar workers is expected to be just 0.9% (48,600 workers) in 2024-25. If realised this will be the slowest year for white collar jobs since the pandemic-induced slowdown of 2019-20. Professional services roles have taken a hit as many large companies have right sized their workforce, alongside minimal hiring in credit sensitive industries.

• Growth in the blue collar workforce is expected to soften to 1.7% (63,600 workers) in 2024-25 and 0.3% (10,300 workers) in 2025-26. Despite an increasing focus on residential construction, capacity constraints are expected to limit the potential growth rate in construction employment.
  

Employment Forecasts is released quarterly and provides forecasts and commentary for each industry and occupation, 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.