According to the latest Deloitte Access Economics Employment Forecasts, 2023 was a strong year for job gains, with an additional 381,000 Australians employed, translating to almost 32,000 people per month.
Commenting on the report, Deloitte Access Economics partner, David Rumbens, said: “The year ended on a softer note with employment falling by 65,100 people in December 2023 – the largest monthly decline since September 2021 – a month affected by pandemic lockdowns. The January 2024 labour-force data continued the subdued performance, with employment in the month lifting by only 500 people.
“More broadly – 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%.
“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 below 20% – the lowest share since early 2021.
“In the second half of 2023, many employers changed their attitudes around workforce, with some 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, following strong growth of 4.3% (568,800 jobs) in 2022-23, Deloitte 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)”, continued Rumbens. “Despite a more resilient outlook, the 2024-25 financial year is set to be the slowest growth year for the white-collar workforce since COVID impacted 2019-20.
“More subdued white-collar employment growth will do nothing to please CBD commercial property agents, already wrestling with high office vacancy rates.
“Even for offices that aren’t vacant, they’re 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 US also found that firms with mandatory return-to-office plans don’t experience notable changes in profitability and productivity, and overall employee satisfaction was shown to decline in these organisations.”