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 Australian labour market examine 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, the KPMG Labour Market Pressure Index offers organisations a comprehensive view of the labour market's health in Australia.

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Australian Labour Market Update – August 2025

Highlights statistics in the sub-markets that contribute to Australia's overall employment numbers

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Key insights into Australia's labour market

Although remaining tight by historical standards, the labour market is not exerting excessive inflationary pressures

The gradual softening of the labour market has seen the KPMG Labour Market Pressure Index return to the ‘neutral zone’. Australia is in a fortunate position, with higher interest rates successfully tackling post-pandemic inflation, while labour market gains during this period have largely been preserved. This has been critical in helping households navigate the cost-of-living crisis, while also supporting government efforts at budget repair.
Without a proactive approach, economic headwinds could dampen labour market conditions by more than is necessary

Given the recent economic data has been soft, the economy still faces headwinds which could translate into a weakening labour market. Assuming the support of a further three rate cuts this year, KPMG expects the unemployment rate to end the year at 4.3%, with employment growth easing to 1.0%.
Recent changes to the temporary skilled migration program are long overdue, but very welcome considering ongoing workforce challenges in some sectors

A revised skilled occupation list and the new Skills in Demand (SID) visa, which replaces the previous Temporary Skills Shortage (TSS) visa, are welcome changes to ensure that Australia’s migration program is fit-for-purpose. This reform recognises the need to fill gaps in the local workforce in an effective manner.

Download: Australian labour market in detail

For a detailed analysis of Australia’s labour market that focuses on industry and regional aspects contributing to unemployment numbers, read KPMG's Australian labour market updates.

Australian Labour Market Update – August 2025

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Australian Labour Market Update – February 2025

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Australian labour market in detail – June 2024

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How KPMG's Economics team can help

Using KPMG's Labour Market Pressure index, our Economics specialists can help you understand the impact of KPMG's estimated equilibrium unemployment rate and actual unemployment rates on your business.

To learn how KPMG’s Economics team can help you navigate Australia’s current business and economic environment and to plan for future developments facing your industry, contact us.