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Businesses are pulling back from hiring as the labour market turns, with employment growth forecast to slump to 0.9 per cent next year.
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FY24 to be the biggest white-collar slowdown since COVID: Deloitte
21 February 2024
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The white-collar workforce is set to experience its slowest year of growth since the pandemic due to deteriorating economic conditions and employers downsizing their headcounts, according to Deloitte.
February’s Deloitte Access Economics Employment Forecasts report predicted white-collar employment growth to fall from 2.5 per cent to 1.5 per cent in FY2024–25.
Partner David Rumbens said it was a sign that the labour market had turned and “the dial has shifted” after a period of post-pandemic growth.
"The dial has shifted – two-thirds of 2023’s job gains came in the first half of the year," he said.
“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.”
He said January’s labour force data continued this subdued growth, with employment in the month lifting by only 500 people.
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“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 lockdowns,” he said.
Job vacancy numbers also confirmed Deloitte’s forecasts, being 14.4 per cent lower (65,300 fewer listings) than a year ago.
“Job vacancies also confirm a turning point,” Mr Rumbens said. “Alongside fewer total job vacancies, the share of Australian businesses reporting vacancies now sits below 20 per cent, the lowest share since early 2021.”
As a result of the declining labour market conditions, Deloitte said national employment growth would slow to 2.6 per cent (+356,200 jobs) by the end of the financial year, and 0.9 per cent (+133,400 jobs) in FY2024–25.
For white-collar workers, Deloitte predicted FY2024–25 would be the “slowest year for the workforce since the pandemic year of 2019-20”.
“Following estimated growth of 2.5 per cent (128,600 workers) in 2023–24 the white-collar workforce growth is expected to moderate to 1.5 per cent (78,200 workers) in 2024–25,” Mr Rumbens said.
He predicted subdued white-collar employment growth would hurt commercial property agents in particular and cause even higher vacancy rates.
“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.”
Meanwhile, as employment rates fall, Deloitte said the unemployment rate increased from 3.7 per cent to 4.1 per cent through the year to January 2024, and the underemployment rate rose from 6.1 per cent to 6.6 per cent.
Commentators have predicted that if the trend continues, the RBA might be compelled to “consider easing measures earlier than anticipated before inflation is well and truly under control”.
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