What a cooling job market means for employers and job seekers

Australia’s labour market continues its slow correction as job vacancies edge lower for the second half of 2025. While the pace of hiring has clearly eased, the latest data points to a more balanced environment—one where employers are regaining stability and job seekers are adjusting expectations after several years of intense competition for talent.

According to the Australian Bureau of Statistics, total job vacancies fell by 2.7% in the three months to August, bringing the national total to just over 327,000. This dip was primarily driven by the private sector, which saw a 3.4% decline, while the public sector strengthened with its fourth consecutive rise of 2.2%. These mixed results suggest that, although demand for staff remains healthy, the market is shifting away from the frenzied activity seen during the post-pandemic recovery.

Yet, the broader picture offers context: vacancy numbers are down just 1.5% year-on-year—a far gentler fall than the 16.9% drop seen at the same time in 2024. For many organisations, this slowdown may signal not weakness, but recalibration. The job market appears to be finding its equilibrium, with employers focusing on strategic hires and job seekers becoming more selective about opportunities that align with their career goals.

“Vacancies have eased again this quarter, but the market feels steadier—less volatile and more predictable than we’ve seen in the last few years.”

On a recent Australia Market Update, host Peta Seaman, SA Managing Director at people2people, discussed the changing dynamics behind the data and what they mean for both employers and job seekers. She noted that while the national trend shows a modest decline, the story varies significantly across regions. Five of the eight states and territories reported an increase in vacancies, with the Northern Territory leading the charge at nearly 22% growth. In contrast, Victoria recorded the sharpest drop, down almost 9%, highlighting how regional labour markets are reacting differently to economic pressures.

Peta explained that these results are not entirely unexpected. After years of high turnover and wage growth pressures, many employers are refocusing on retention and workforce planning rather than expansion. With inflation softening and business confidence steady, recruitment activity is becoming more targeted—centred on essential roles, succession planning, and skills that enable digital transformation and productivity gains.

For job seekers, however, this means competition is tightening. With online job ads down 4.2% in August and application volumes rising by 22%, candidates can no longer rely on the abundance of opportunities seen during peak demand years. Instead, the emphasis has shifted to differentiation—standing out through skills, adaptability, and alignment with employer values.

Encouragingly, the national vacancy fill rate reached 70.6% in the June quarter, suggesting that hiring processes are becoming more efficient. This is a welcome change for employers who, in 2023 and 2024, often struggled to fill roles amid shortages. As Peta observed, this rebalancing points to a market that is still active but now functioning at a more sustainable pace.

She also highlighted that while the slowdown may appear concerning at first glance, it could actually benefit long-term employment stability. Businesses are taking time to refine role requirements, invest in training, and ensure cultural fit—factors that contribute to stronger retention outcomes. Job seekers who demonstrate flexibility and a willingness to upskill are likely to find themselves well positioned even as overall vacancy numbers decline.

Finally, Peta emphasised that recruitment trends in 2025 are being shaped not only by economic conditions but also by shifting workforce expectations. Flexibility, wellbeing support, and clear career pathways continue to rank highly in job seeker priorities. As organisations balance these needs with budget constraints, the ability to hire “quality talent, fast” remains a key differentiator in the market.

How can employers strengthen their hiring strategy in a cooling market?

Streamline your hiring process – candidates are still moving quickly; lengthy decision timelines risk losing top talent even in a slower market.

Focus on quality over quantity – refine role scopes and use data-driven methods to target essential skill sets.

Leverage regional trends – growth pockets like the Northern Territory show that opportunities remain; expand sourcing channels geographically.

Invest in retention and internal mobility – upskilling and career progression are vital in holding onto hard-won talent.

Align with job seeker expectations – flexible work arrangements and wellbeing initiatives continue to influence candidate decisions.

Partner with specialists – recruitment experts can help you identify top performers faster while maintaining cultural and skill alignment.