Australia’s labour market has experienced a significant slowdown in mid-2025, highlighting the pressing need for economic reforms aimed at boosting productivity, according to Deloitte Access Economics. Recent data indicates a stall in total employment growth, with negligible increases recorded in both May and June. The number of unemployed Australians has climbed to 659,600, marking the highest figure since late 2021. Consequently, the unemployment rate has risen to 4.3 per cent, while annual employment growth has moderated to 2.0 per cent, a solid figure but below pre-pandemic averages.
David Rumbens, a partner at Deloitte and lead author of the Employment Forecasts report, noted the presence of significant sectoral imbalances despite the overall slowdown in jobs growth. He pointed out that the non-market sector, encompassing healthcare, education, and public administration, continues to be a primary driver of employment gains. This sector accounted for over two-thirds of total job growth in the year leading up to March 2025.
Deloitte anticipates a continued slowdown in labour market growth throughout 2025. Overall employment growth is projected to ease from 2.3 per cent in 2024-25 to 1.5 per cent in 2025-26, reflecting a deceleration in public spending growth and a decline in net overseas migration. Rumbens emphasised that the labour market’s resilience post-pandemic has not been mirrored by corresponding economic growth, resulting in a 5.7 per cent decrease in labour productivity, equivalent to approximately $150 billion in foregone annual real GDP.
Rumbens urged the government to implement long-term reforms, including overhauling the tax system, reducing regulatory burdens to promote the adoption of artificial intelligence, enhancing market discipline within the care sector, and revitalising Australia’s apprenticeship system. He stated that productivity-enhancing reforms are essential for supporting sustainable growth and ensuring economic resilience moving forward.
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