13 August 2025: Consistent with very modest growth in the broader economy, the Australian labour market has hit a bump in the road, underscoring the urgent need for productivity-enhancing economic reform.
Releasing the August 2025 edition of the Employment Forecasts report, Deloitte Access Economics Partner and lead author, David Rumbens, said: “Total jobs growth has slowed at the mid-point of 2025. In the months of May and June employment growth was close to zero as the jobs market hit a flat patch.
“Additionally, the number of unemployed Australians now sits at 659,600 people – the highest level since late 2021 – which has seen the unemployment rate increase to 4.3%. The recent jobs flat patch has seen overall annual employment growth moderate to 2.0% (286,300 workers), still solid but below the pre-pandemic average.
“Those overall numbers mask some sectoral imbalances. Non-market sector employment – covering health care, education, and public administration – continues to expand strongly, accounting for more than two thirds of total employment gains in the year to March quarter 2025.”
Deloitte Access Economics expects the Australian labour market to ease through 2025 before stabilising.
The number of employed Australians is expected to rise over coming years, though at a slower rate compared to post-pandemic. Overall, the pace of employment growth is expected to ease gradually from 2.3% (324,600 workers) in 2024-25 to 1.5% (218,800 workers) in 2025-26 as public spending growth slows and net overseas migration trends downward.
Rumbens added: “Contained inflation, declining interest rates, and gradual real wage gains are expected to strengthen parts of the market sector, particularly across industries exposed to the willingness and capacity of households to spend. Overall, market sector employment is expected to grow by 0.9% (86,500 workers) in 2025-26.
“However, the non-market sector is expected to remain a key pillar of employment growth in the year ahead, underpinned by ongoing government support with employment set to grow by 3.0% (135,000 workers) in 2025-26.”
How does that play out by broad worker classification?
CBD employment growth to bounce back
Challenging economic conditions and persistent uncertainty have constrained revenue growth and hiring across many Australian firms. This has meant that CBD employment growth has been particularly weak for financial and service-based industries.
However, the combination of lower inflation, falling interest rates, and solid government spending means total CBD employment growth is now expected to shift up to 2.1% (33,500 workers) in the financial year ahead, outpacing employment growth across the broader economy.
Rumbens added: “CBD employment growth is expected to be strongest along the Eastern seaboard, with Melbourne leading as financial sector hiring rebounds across the financial year. By comparison, Perth, Canberra, and Adelaide may see lower rates of growth.
“Overall employment growth in Victoria is expected to be above the national average in 2025-26, but the state’s weaker fiscal position highlights the need for a stronger private sector contribution to underpin a more sustainable economic recovery.”
Current labour market challenges are less about job creation and more about productivity.
Rumbens added: “Since the pandemic, labour market resilience has not been matched by similar economic growth, leading to a significant decline in labour productivity. Since its peak in March 2022, total labour productivity has fallen by 5.7% - the equivalent of around $150 billion in foregone annual real GDP.”
“In this context, the government has leaned into the economic policy discussion with the upcoming Economic Roundtable aiming to enhance productivity, bolster economic resilience, and strengthen fiscal sustainability.”
The focus should be on high-impact, long-term reforms, particularly those that will benefit future generations, including:
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.
Disclaimer
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. Please see www.deloitte.com/au to learn more.
Copyright © 2025 Deloitte Development LLC. All rights reserved.
Press contact(s):
Lachlan Moffet Gray
Communications, Media & Corporate Affairs
M: +61 413 739 290
lmoffetgray@deloitte.com.au
Media Enquiries
media@deloitte.com.au