Understanding the overall economic landscape is useful for businesses looking to hire. Callam Pickering, Senior Economist at Indeed, provided insights into the current state of Australia's labour market during the FutureWorks conference held in Melbourne last month.
Australian labour market trends
The trajectory of the Australian labour market is multifaceted, influenced by both technological advancements and demographic transitions. Robust population growth is proving instrumental in mitigating prevalent skill shortages, albeit amidst a backdrop of stagnant wage growth and evolving cost-of-living concerns. With job postings on the rise and demographic shifts reshaping the workforce, employers must stay agile in their recruitment strategies to capitalise on emerging trends and address skill shortages effectively.
Callam also contributed to the Australian Outlook: Insights from the 2024 Jobs & Hiring Trends Report, offering a deep dive into Australia's employment landscape and providing actionable insights for businesses and hiring managers.
Labour market developments
As of Callam’s presentation, Australia's unemployment rate hovered around a manageable 4%. However, forecasts by the Reserve Bank of Australia suggest a slight uptick in the near future. Despite this, certain sectors are experiencing notable growth in employment. Industries such as healthcare and social services; professional, scientific, and technical services; as well as construction are witnessing significant increases in job opportunities. Conversely, areas like accommodation and food services; agriculture, forestry, and fishing; along with information media and telecommunications are experiencing declines in employment.
Cost-of-living concerns persist, with wage growth stagnating at around 4%. While inflation has decreased from its post-COVID peak of 8% to approximately 4%, real wages remain relatively flat. Additionally, the prevalence of multiple job holders in the workforce has seen a spike since 2020, now representing over 6% of workers.
Labour demand
Online job postings on Indeed.com have surged by an impressive 69% since 2020, positioning Australia favourably on the global stage, ranking third for job growth. Sectors witnessing the most significant increases in job postings include education, maintenance, personal care, home health and nursing. Conversely, industries such as sales, software development, information design and documentation are experiencing declines in job opportunities. Despite fluctuations, job vacancy rates peaked at over 3% last year, with mining; accommodation and food services; and professional, scientific, and technical services boasting the most vacancies.
Labour supply
Australia's population continues to grow steadily, expanding by approximately 3% annually. The majority of this growth comprises individuals under 44 years old. Notably, over 2.9 million Australians commenced their current job within the past year, while 1.8 million Australians are currently seeking employment opportunities. These are all positive signs for hiring managers.
Additionally, 1.3 million Australians have changed jobs in the past year, with a further 1 million ready to enter the workforce immediately. Reasons for not actively seeking work vary, including education commitments, health issues, and caregiving responsibilities, particularly among women.
The steady growth of Australia's population, coupled with the influx of individuals entering the workforce and seeking new opportunities, presents a promising scenario for hiring managers. To capitalise on these positive indicators, hiring managers should cater to the diverse needs of candidates, including with flexible work arrangements and tailored benefits. By embracing these insights, employers can navigate the evolving landscape effectively and position themselves for success in attracting and retaining top talent.
Future of Work
Key demographic shifts, including an ageing population, increased female participation, and high migration rates, are reshaping the future of work. These demographic changes influence industries and occupations that will thrive or struggle, impacting both candidates and consumers. Notably, the most employed age demographic falls within the 55 years and over bracket. Female participation in the workforce, meanwhile, continues to rise, currently representing 62.6% of workers.
Employers need to recognise the pivotal role of gender diversity in shaping the future of work. With women representing a significant and increasing proportion of the workforce, initiatives promoting gender equality and female participation are paramount.
The integration of AI into the job market presents both challenges and opportunities. Approximately 21% of jobs posted on Indeed are deemed highly replaceable by AI, with a further 55% falling within the 80% to 50% replaceable range. Industries such as software development, legal, HR, and marketing are among those most affected by AI advancements.As businesses strive to uphold Diversity, Equity, Inclusion, and Belonging (DEIB) goals, understanding the role of AI is essential. AI has the potential to either advance or hinder DEIB objectives within organisations, and teams need the necessary skills and knowledge to effectively utilise the technology.
Closing thoughts
Australia's labour market remains tightly contested, with job vacancies and postings showing signs of moderation. However, strong population growth is aiding in alleviating widespread skill shortages, albeit against a backdrop of stagnant wage growth and evolving cost-of-living concerns. With job postings on the rise and demographic shifts reshaping the workforce, staying agile in recruitment strategies is essential for capitalizing on emerging trends and addressing skill shortages effectively.
As organisations look to the future of work, demographic shifts and AI integration will be paramount, along with a commitment to promoting gender diversity and upholding DEIB goals. The future of work is multi-faceted, with evolving technologies and demographic shifts shaping the landscape. Despite challenges posed by AI, the recruitment landscape in 2024 presents opportunities for businesses to adapt and thrive in a rapidly changing environment.
