Australian Labour Market update

Assessing the health of Australia’s labour market is complex. While unemployment rates are a high-level indicator, geographical, industry and skills differences are also key factors in determining the overall state of the labour market in Australia.

KPMG’s insights into the Australia’s labour market examines industry and regional dynamics that influence labour demand and supply. Our detailed analysis highlights factors that shape the labour market’s trends and fluctuations and is based on individual elements that contribute to the overarching unemployment rate number.

Included in the report is the KPMG Labour Market Pressure Index. Designed to measure inflationary pressures due to labour market tightness, KPMG Labour Market Pressure Index offers organisations a comprehensive view of the labour market's health in Australia.

• Easing of labour market constraints has stalled
  The KPMG Labour Market Pressure Index deteriorated for the first time in two years, ending the December quarter 2024 in the constrained zone. Although some excessive pressures remain in Australia’s labour market, the index is likely to show further recovery during 2025.
• Matching workers to jobs has become more efficient
  A gradual easing of skills shortages, supported by international migration, has allowed the Australian labour market to perform more efficiently (as measured by the Beveridge Curve). After two years of poor performance, efficiency has returned to more typical levels, indicating that firms should find it easier to hire suitable workers.
  

• Disappointing labour productivity growth remains a risk
  The productivity of the labour force continues to be a concern, with output per worker contracting for two consecutive quarters. A lack of labour productivity growth presents risks to future real wage growth.