Employment Forecasts

Australian employment rebounded sharply at the end of 2021, increasing by more than 431,000 people between October and December 2021. The growth was concentrated in New South Wales and Victoria alongside their reopening following the Delta variant lockdowns.

However, the emergence of Omicron over the summer holiday period resulted in a slowdown of the employment recovery. The learning to live with the virus approach to the Omicron wave resulted in a large decline in hours worked and a dramatic increase in the number of workers on zero hours due to illness, injury or sick leave in January 2022 (Chart 1).

Chart 1: Workers on zero hours due to illness, injury or sick leave

Source: Australian Bureau of Statistics (ABS) Labour Force Survey, Deloitte Access Economics. 

But sickness isn’t the only reason for the recent loss of momentum – there is simply less spare capacity to tap into, with the national unemployment rate at just 4.2%. More broadly, underutilisation of labour (the extent to which people's desire for work is not being met) has been moving down. The decline in underutilisation has been driven by declines in both those wanting work (unemployed) and those wanting more hours (underemployed).

Despite the recent challenges, Omicron has not notably reduced the large amount of labour demand in the economy. Job advertisements and vacancies are still well above their pre-COVID levels. In January 2022, job advertisements in Sydney and Melbourne were 37% and 50% above their February 2020 (pre-COVID) levels.

Deloitte Access Economics’ latest edition of Employment Forecasts highlights that the things which have divided us during the pandemic – borders, COVID lockdown policies and the like – will become less important as we learn to live with the virus.

Future employment growth is expected to show up in the markets which were hardest hit by the Delta lockdowns (Canberra and Sydney), closing the gap with those markets where employment has been less affected by restrictions (Perth and Brisbane).

Chart 2: Forecast growth in total CBD employment (financial year)

Source: Deloitte Access Economics Employment Forecasts.

Note: ‘All markets’ refers to the CBD markets covered in the Employment Forecasts publication.

Through the lockdown period, Australian employers were already getting more resilient. The impact of the Delta-lockdowns on total CBD white collar employment was much smaller than the first round of COVID lockdowns. Nationally, we estimate the decline in white collar employment across all CBDs and regions was only around 14,000 due to the 2021 lockdowns compared to the more than 70,000 decline in white collar employment due to lockdowns in 2020.

Despite the see-saw in employment, Deloitte Access Economics expects that 2021-22 will be the strongest year for white collar employment growth since 2006-07 for Australia’s CBDs, with employment growth of 3.0% for the financial year.