Balancing Hiring Caution with Candidate Demand

The Australian employment market in 2025 reflects a landscape adjusting to post-pandemic realities, softening hiring intentions, and shifts in candidate expectations. While job ads declined by 11% this year, applications have surged by 22%, indicating a cautious but active talent market. Employers are navigating the challenge of attracting top talent while contending with persistent skills shortages in key sectors, despite a general stabilisation in hiring activity.

Business confidence remains lower than in previous years, with employers choosing to restructure rather than replace staff as vacancies arise. This cautiousness, however, masks ongoing demand in certain occupations, where skills shortages continue to affect 30% to 35% of roles. As a result, many businesses are leaning more heavily on recruitment specialists and external talent solutions providers to meet hiring needs, particularly where in-house capability has diminished.

Flexibility remains a core expectation among job seekers, but signs are emerging of a shift in employer behaviour. Hybrid work is still widely offered, yet some employers are testing limits around in-office presence—particularly for training and onboarding. At the same time, a growing number of businesses are hiring offshore staff directly, adding a new dimension to what remote work means in 2025.

Internally, businesses are also focusing more on mobility. Rather than external hires, many are upskilling existing employees and creating pathways for internal movement. This not only improves agility but helps retain institutional knowledge in an increasingly competitive labour market.

“We are seeing a real trend toward offshore employing… employing directly, but offshore talent who are based offshore.”



Brooke Lord, Head of Advocacy and Policy at RCSA, and Guy Davy, Senior Manager Talent Solutions at LinkedIn, joined Liz Punshon, Victoria Director at people2people, to unpack the pressures facing Australia’s job market.

Lord outlined the continued softening in hiring intentions. “A little bit lower business confidence and a reticence to really [recruit]… businesses that scaled up… now when people leave, [they’re] restructuring rather than rehiring.” This conservatism is also linked to the persistent—but uneven—skills shortage. “We're still seeing persistent skill shortages in sort of 30 to 35% of occupation types,” she said.

This dichotomy is further complicated by ongoing changes in workforce expectations. Flexibility remains high, but many organisations are reassessing their hybrid strategies. “There’s a trend to push for contact where possible,” Lord explained. She described a “cultural wait and watch situation” where businesses are cautiously testing how much in-person engagement can be reintroduced without losing talent.

In parallel, some companies are now bypassing domestic labour altogether. “We're seeing a real trend toward offshore employing,” Lord said, referring to companies hiring overseas talent directly. This approach allows organisations to balance talent shortages with budget constraints, but it also presents new challenges in team integration and management.

From LinkedIn’s perspective, Davy painted a picture of stabilisation with signs of future growth. “Hiring is still down year on year, but the slowdown has begun to show signs of moderation,” he said, highlighting “green shoots” as job switching starts to rise—typically a precursor to market recovery.

He also noted that applications are up not only due to fewer roles but because candidate confidence is returning. “We’ve seen about a 65% increase in job applications,” Davy said. But the quality of applications has varied. With smaller internal recruitment teams, automation has sometimes led to volume over relevance. “There’s a good thing about automation, and there’s probably the downside… companies use or prioritise quantity.”

To address this, Davy recommended a multichannel approach: strong employer branding, proactive sourcing, and more thoughtful advert creation. “If you are getting irrelevant candidates, have a look at the process,” he urged. Outdated job ads and weak targeting were leading to mismatches in many instances.

On candidate expectations, both guests agreed the focus has shifted. Davy shared that the top four things talent now looks for are: the opportunity to work on innovative projects, learning in-demand skills, flexible work arrangements, and being surrounded by highly capable colleagues. These themes echo RCSA’s insights, where learning and progression have become critical for engagement and retention.

Practical Takeaways for Australian Employers in 2025

• Expect continued softening in overall hiring, but prepare for talent competition in high-demand roles.

• Invest in internal mobility and upskilling to improve agility and retention.

• Balance flexible work offers with realistic expectations around team connection and onboarding needs.

• Consider offshore talent solutions cautiously, ensuring integration processes are robust.

• Improve job ad quality and employer branding to attract relevant candidates more effectively.

• Prioritise innovation, skill development, and culture in your value proposition to attract top-tier talent