Australia’s 2025 Job Market: What employers need to know

Australia’s employment market in 2025 has been defined by stabilisation, recalibration, and a gradual shift in the balance of supply and demand for talent. After several years of volatility, the market is settling into a more predictable rhythm, but not without the friction that accompanies change. Employers are operating with greater caution, job seekers are reassessing expectations, and both sides are navigating a landscape shaped by cost pressures, rising competition, and rapid advances in technology.

Across the country, job ads have increased in recent months, yet overall activity remains softer than it was a year ago. With job advertising still 7.3% lower year on year, signs of improvement coexist with the reality of constrained hiring appetite. As businesses plan for 2026, the question is not simply whether conditions will improve, but how structural trends emerging in 2025 will influence hiring, retention, and workforce planning in the months ahead.

Amid this environment, salary expectations, flexibility, AI adoption, and job security continue to influence the decisions of both employers and job seekers. The dynamics are shifting, and understanding these trends will be critical for organisations seeking to stay competitive.

“Job growth has only been about two-thirds of what it was the previous year.”

On a recent AU Market Update, Host Aiden Boast, people2people North Shore Manager, was joined by Guest Ross Clennett, High Performance Recruitment Coach and Co-Host of the Recruitment News Australia Podcast, to unpack the realities of Australia’s talent landscape. Clennett highlighted that unemployment has shifted modestly, noting “the unemployment rate has risen slightly, but historically that’s still very low.” This stability, despite broader economic headwinds, has created an interesting tension: roles remain available, yet competition has intensified.

One of the most significant shifts is the composition of job creation. Clennett explained that “only 51% of jobs added have been full-time jobs in the past 12 months.” This adjustment has influenced employee priorities, with demand increasing for stability, predictability, and well-defined working arrangements.

Applicant volume has become a defining challenge. SEEK recently recorded the highest number of applicants per vacancy in its reporting history, aligning with Clennett’s observation that “employers are finding it harder to distinguish higher calibre candidates because generative AI has raised the standard of applications.” This has elevated the importance of robust screening, capability verification, and tailored assessment processes.

Labour market mismatches continue to shape hiring strategies. Clennett detailed that “around 700,000 Australians are not working due to a health condition but would like to be working” and “another 800,000 people work part-time but want more hours.” These figures highlight the need for employers to adapt job design, increase flexibility, and broaden accessibility to attract underutilised talent pools.

Job seekers themselves are adjusting their decision-making. Clennett referenced the latest sentiment data, noting “only 18% of people are considering a career move, down from 23%.” This decline in mobility has made retention an increasingly valuable and cost-effective focus for organisations.

AI capability has also become a competitive differentiator for both employees and businesses. Clennett emphasised that “61% of employees would consider leaving if their AI-related skills development wasn’t supported.” This shift reflects a future-focused workforce seeking relevance in a rapidly evolving landscape.

Flexibility remains a top priority across sectors. As Clennett noted, “employees are willing to forego pay rises for greater flexibility.” For employers, this trend has reinforced that competitive talent attraction doesn’t rely solely on salary budgets but on thoughtful, adaptable working models.

Persistent skill shortages are expected to continue shaping planning for 2026. Clennett highlighted that “aged carers, teachers, truck drivers, electricians and childcare workers will still have fewer candidates than jobs.” These sectors may face sustained hiring bottlenecks without proactive pipeline development.

Workforce participation remains another national priority. Clennett explained that “Australia’s labour force participation rate is about 67% compared to nearly 72% in New Zealand.” Strengthening participation will be essential to improving talent availability and supporting economic resilience.

“It’s imperative that we continue to keep people in the labour market longer because workforce participation benefits employers, workers and taxpayers.” As Australia prepares for the year ahead, employers are entering a phase where precision matters: precision in hiring, precision in workforce design, and precision in development programs aligned to the changing expectations of employees. The combination of higher applicant volumes, skill shortages in essential professions, rising demand for flexibility, and rapid technological adoption means that the organisations best positioned for 2026 will be those that invest early in adaptability and talent alignment.

What should employers be asking themselves now?

• Are our hiring processes equipped to distinguish quality candidates in an AI-shaped application environment?
• Do our flexibility offerings align with the expectations of the modern workforce?
• How well are we supporting employee development, particularly in AI and emerging technologies?
• Are we tapping into underutilised labour pools, including those seeking part-time or adapted working conditions?
• How robust is our retention strategy in a market where job movement is slowing but competition for talent remains high?
• Are we proactively planning for persistent skill shortages in critical sectors?