The Australian labour market remains resilient but tight, with skill shortages persisting in areas such as IT infrastructure, risk management, and customer service. Federal election promises may drive additional job creation later this year, while businesses continue focusing on AI integration and workforce adaptability.

Economic and Interest Rate Trends

The Reserve Bank of Australia (RBA) has maintained its cash rate at 4.1%, signalling a stable interest rate environment as inflationary pressures ease. Globally, interest rates are beginning to decline in regions such as the US, UK, Europe, and New Zealand, reflecting easing monetary policies. Economic forecasts suggest that 2025 could be a strong growth year, supported by the Australian federal election and potential fiscal stimulus.

Organisations should leverage this period of economic stability to invest in workforce planning initiatives. Focus on building agility into your talent strategy by identifying critical skills gaps and developing flexible hiring models to adapt to changing market conditions.

Labour Market Overview

• Unemployment Rate: The unemployment rate remains steady at 4.1%, reflecting a tight labour market.
• Participation Rate: Slightly decreased to 66.8%, although still near record highs.
• Employment: Employment declined marginally in February 2025, but monthly hours worked increased to 1,973 million, indicating strong workforce utilisation.

With unemployment rates remaining low and participation high, competition for talent is fierce. Employers should focus on improving their employee value proposition (EVP) by offering flexible work arrangements, competitive pay, and clear career development pathways to attract and retain top talent.

Job Market Trends

National job advertisements rose for the third consecutive month (+0.5%), with applications per job ad also increasing slightly (+0.7%). Growth was driven by industries such as:

• Hospitality & Tourism: Job ads grew 1.1% in March after two years of decline.
• Trades & Services (+1.0%) and Manufacturing, Transport & Logistics (+1.3%) also showed modest increases.
• However, declines were recorded in Information & Communication Technology (-3.7%) and Call Centre & Customer Service (-6.3%).

To stay competitive in high-demand industries like Hospitality or Trades, organisations should consider skill-based hiring practices and invest in upskilling programs for existing employees to meet evolving demands quickly.

Skills Demand and Workforce Trends

Emerging sectors include AI, renewable energy, healthcare, and education. LinkedIn data highlights that AI literacy is the fastest-growing skill in Australia, with a 2.8% increase in members adding AI-related skills to their profiles this year alone. Soft skills such as communication, adaptability, and strategic thinking are also highly valued as AI reshapes roles across industries.

Organisations must integrate continuous learning into their culture to keep pace with technological advancements. Develop tailored training programs that focus on both technical skills (e.g., AI literacy) and soft skills (e.g., leadership and adaptability). Consider tools like skills assessments or one-on-one coaching to personalise development plans for employees.

Outlook for 2025

The Australian labour market remains resilient but tight, with skill shortages persisting in areas such as IT infrastructure, risk management, and customer service. Federal election promises may drive additional job creation later this year, while businesses continue focusing on AI integration and workforce adaptability.

Prepare for future workforce challenges by investing in leadership development programs that equip managers with change management skills. Encourage leaders to manage their energy rather than their task —a practice adopted by companies like Spotify—to foster engagement and resilience during periods of change.

This comprehensive snapshot of Australia's labour market highlights the need for proactive workforce strategies to navigate economic shifts successfully. 
Reference Data: Jobs and Skills Australia, Indeed, PwC, Seek, AFR, Deloitte and LinkedIn

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