TLDR: The Quick Read
Latest Australian Labour Market Trends 2026. Australia’s jobs market has cooled from the post-pandemic heat but it’s not weak. Unemployment is 4.2%, participation is holding around 67%, underemployment is 5.9%, and hours worked are near record levels. Translation: demand has eased, but most people who want work are still in it, and many are working close to full capacity.
Where the headline numbers really are
In July 2025, the ABS reported the jobless rate at 4.2%, with 14.64 million people employed. Monthly hours worked lifted again to ~1.99 billion, and full-time jobs rose while part-time dipped, small but telling signs of a market that remains tight in the centre, not just at the edges. Participation sits at ~67%, historically high for Australia. None of this screams recession. It says “steady, with a gentle downshift.”
Hiring demand: cooler, not cold
Vacancies have come off their peaks but remain high. The ABS counted ~339,400 job vacancies in May 2025 (seasonally adjusted), up 2.9% on the quarter but down 2.8% over the year. Put another way: there are about 1.8 unemployed people per vacancy, still tight by historical standards. The rise this quarter was led by higher-skill sectors including professional services and construction.
Jobs and Skills Australia’s vacancy report shows online ads have drifted lower over the year, but from elevated levels. Hiring hasn’t collapsed; it’s normalising. Expect roles to take a touch longer to fill and candidates to have a bit less leverage than in 2022–23, but good talent still moves.
Wages and prices: easing, then a wobble
Wage growth has cooled to something like normal. The Wage Price Index rose 3.4% over the year to the June quarter. Average Weekly Earnings for full-time adults sat around $2,010 a week in May 2025. In short: pay packets are still growing, but not racing.
On prices, the June quarter CPI ran at 2.1% year-on-year, comfortably inside the RBA’s 2–3% band. Then the monthly CPI ticked up to 2.8% in July. One month doesn’t make a trend, but it’s a reminder inflation isn’t dead, and rate-cut timing will stay data-dependent. For workforce planning, assume moderate nominal wage growth with slightly positive (but fragile) real gains.
Job switching is down; why that matters
The “great resignation” is over, if it ever happened here. The job mobility rate fell again to 7.7% in the year to February 2025, with 12% of 15–24-year-olds changing jobs (still the most mobile group, but less than pre-pandemic). Lower churn sounds calm, but it can also slow skills diffusion and productivity. If you’re counting on lateral hires to bring in capability, assume fewer candidates will jump without a strong offer and clearer growth path.
Where the jobs are (and will be)
The centre of gravity keeps shifting toward services. Health Care and Social Assistance remains our largest employer and the biggest projected growth engine, with Professional, Scientific & Technical Services and Education & Training also carrying a large share of the decade’s gains. Construction is re-accelerating off housing and infrastructure demand. If you operate in these sectors, talent pipelines and training will decide your growth rate more than marketing will.
Hours, mix and underemployment
Underemployment, people who want and can take more hours, sits at 5.9%. The part-time share is roughly 31%. That tells you there’s not a big pool of easy extra hours to tap without changing job design or rostering. If you need more output quickly, you’ll likely be hiring, not just stretching the roster.
Migration and labour supply
Net overseas migration has come down from its record peak as departures pick up, but remains above pre-pandemic levels. The year to June 2024 saw a net gain of ~446,000 people; for the year to December 2024, net migration contributed ~341,000 to population growth. For employers, that means supply relief compared with 2022–23, but housing constraints still limit how fast newcomers translate into available workers in specific locations.
New rules shaping working life
From 26 August 2025, the right to disconnect now also applies to small businesses. Employees can refuse to monitor or respond to out-of-hours contact if it’s unreasonable to expect it. This has been in place for larger employers since 2024. Practically, you’ll want a short, written protocol: which roles have on-call expectations, what counts as “urgent,” and how compensation works. It’s cleaner than arguing case by case.
What this means if you’re hiring
First, calibrate demand.
Vacancies are still plentiful but are taking longer to fill. Build two hiring plans: one for steady-state and one for upside so you’re not reinventing the process when a big contract lands. Use salary bands anchored to AWE and your market data; keep sign-on surprises for genuinely scarce roles, not as a default.
Second, widen the net.
With mobility lower, more candidates will move for clear advancement, better manager quality, or flexibility, not just a small pay bump. Write job ads that name the team lead, success metrics for the first 90 days, and training you’ll fund. That’s what convinces a stable performer to switch.
Third, quicken the loop.
If you need a specialist in professional services, health, education or construction, compress decision times. Those candidates juggle multiple offers even in a cooler market. A two-interview path with a practical task beats a four-week odyssey.
If you’re struggling to keep people
Fix the basics before the benefits.
Line managers drive retention. Set 1:1s that actually happen, publish pay bands internally, and push job-crafting (small changes to scope or hours) before you throw in new perks. In a market with fewer switchers, your best hires for niche roles may already be on payroll, they just need a pathway.
Tune rosters to real life.
Underemployment is not high, but some staff want more hours and others want fewer. A quarterly opt-in for extra shifts, along with early posting of rosters, will stabilise availability and reduce last-minute scrambles that burn trust.
State and sector nuance you can’t ignore
The national unemployment rate is a tidy 4.2%, but the experience differs by state and industry. In July, the rate ranged roughly 3.8-4.6% across jurisdictions; construction and professional services show stronger vacancy momentum than some consumer-facing sectors. Use your local vacancy-to-unemployment ratio as the signal for how aggressive you need to be on offers.
Pay settings for 2025–26
With WPI at 3.4% and inflation hovering near the target band (with a recent monthly wobble), most employers are landing around 3–4% for general review budgets, higher for proven scarcities. If you’re seeing larger asks, check whether you’re solving a retention problem late, fix the band, not the exception, or you’ll import pay inequity you’ll regret later.
What to watch next
- Labour Force (monthly): unemployment, participation, hours. A softening here will show up in hiring timelines and wage pressure.
- Vacancies (quarterly) and JSA ads (monthly): leading indicators for time-to-hire.
- WPI and AWE: the cleanest reads on wage momentum and level.
- Policy settings: right to disconnect bedding in across small business; keep your policy crisp and your managers trained.
Bottom line
Australia’s labour market is cooler but still tight. Vacancies are off their highs, switching has slowed, and wage growth has normalised. Health, education, professional services and construction remain the gravity wells for jobs. If you’re hiring, get sharper on role design and faster on decisions. If you’re retaining, invest in manager quality and internal mobility. None of this requires heroics, just a clean system that matches how people actually work now.