Deloitte Access Economics Employment Forecasts

18 February 2024: The 2023 calendar year was another strong one for job gains, with an additional 381,000 Australians employed, translating to almost 32,000 people per month. Continuing to lift the level of employment through a difficult phase is a testament of economic success.

Releasing the February 2024 edition of the Deloitte Access Economics Employment Forecasts report, Deloitte Access Economics partner and lead author, David Rumbens, said: "The year ended on a softer note with employment falling by 65,100 people in the month of December 2023. That was the largest monthly decline since September 2021 - a month affected by pandemic lock downs. The January 2024 labour force data continued the subdued performance, with employment in the month lifting by only 500 people.

"More broadly the dial has shifted - two thirds of 2023's job gains came in the first half of the year. Through the year to January 2024, the national unemployment rate has edged up from 3.7% to 4.1%, and the underemployment rate has edged up from 6.1% to 6.6%.

"And job vacancies also confirm a turning point, now 14.4% lower than a year ago, a reduction of 65,300. Alongside fewer total job vacancies, the share of Australian businesses reporting vacancies now sits below 20%, the lowest share since early 2021.

"In the second half of 2023 many employers have changed their attitudes around workforce, and some are now actively taking steps to right size their workforces for the subdued economic conditions of the
moment.

Deloitte's CFO Survey at the end of 2023 showed that far fewer CFOs now rank 'securing and retaining key talent' among their top risks. This had topped CFO risk agendas for the previous five surveys since mid 2020, but dropped at the end of 2023 to only 46% of CFOs rating it a top risk, down from 71% six months earlier. Further, 40% of CFOs reported that they expected to reduce headcount over the next 12 months.

Looking forward, and reporting on a financial year basis, following strong growth of 4.3% (568,800 jobs) in 2022-23, Deloitte Access Economics expects national employment growth to slow to 2.6% (356,200 jobs) in 2023-24 and 0.9% (133,400 jobs) in 2024-25.

"Following estimated growth of 2.5% (128,600 workers) in 2023-24 the white collar workforce growth is expected to moderate to 1.5% (78,200 workers) in 2024-25, yet still achieve the fastest growth across the three worker classifications (white collar, blue collar and human services). Despite a more resilient outlook the 2024-25 financial year is set to be the slowest growth year for the white collar workforce since the pandemic impacted year of 2019-20.

"More subdued white collar employment growth will do nothing to please CBD commercial property agents, already wrestling with high office vacancy rates," Rumbens said.

"Even for offices that are not vacant, they are not necessarily fully occupied, with the debate around flexible working continuing. Many workplaces and industries are still striving to find the right balance for flexible working conditions.

"Return-to-office mandates are gaining momentum within Australia, with some organisations considering tying renumeration and career advancement opportunities to those that return to the office more frequently. However, from an employee perspective, flexible working arrangements are still highly valued, with many willing to accept a pay cut in exchange for remote work flexibility.

"Recent research conducted in the United States also found that firms with mandatory return to office plans do not experience notable changes in profitability and productivity, and overall employee satisfaction was shown to decline in these organisations."

Employment Forecasts is released quarterly and provides forecasts and commentary for each industry and occupation, plus white collar, blue collar and human services employment. There are three levels of data available: state, city and CBD. Employment Forecasts is particularly useful in the analysis of property market demand.

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