Key Points
- A new report predicts 100,000 Australians will become unemployed in the next 12 months.
- The unemployment rate is expected to rise to 4.5 per cent.
- The report author said Australia has not been generating jobs at a rate that is high enough for job seekers.
Some 100,000 people could lose their jobs over the next 12 months, according to a new report, as economists question whether Australia is headed towards another recession.
Consulting firm Deloitte predicts a net figure of over 100,000 more Australians will be unemployed in the next 12 months, as the job market and the economy slow.
The unemployment rate, currently at 4.2 per cent, could peak at 4.5 per cent, according to the report.
This is slightly higher than the 4.4 per cent peak in unemployment tipped by the Reserve Bank of Australia (RBA) by June 2025.
It attributes the stagnation of jobs and economic growth to the RBA's aimed at cutting inflation back to a rate of 2-3 per cent.
Deloitte Access Economics partner and lead author David Rumbens told SBS News the labour market has continued to generate jobs so far in 2024, but not at a high enough rate to absorb all the additional job seekers that have come onto the labour market.
He said the slowdown would mean about 100,000 more people were unemployed.
"High interest rates are taking money out of the economy that's affecting consumer spending," Rumbens said.
"It's affecting business appetite to invest; business insolvencies are going up."
But he said the economic dip is "not to recessionary levels, but a lot of sectors would see it as recession".
"For example, we know that retail spending has gone backwards for the past 18 months, and we know that business insolvencies are going up," he said.
The RBA said in its August meeting the risk of inflation not returning to its target of 2-3 per cent next year had "", and the bank could raise interest rates to help ensure it does.
Leonora Risse, an economics professor at Canberra University, said the predicted unemployment rate would trigger the 'Sahm Rule' recession indicator, named after US economist Claudia Sahm.
If the average unemployment rate of the past three months increases by 0.5 percentage points above the lowest unemployment rate recorded in the prior 12 months, then the economy is on the path towards a recession, according to the rule.
Risse said the predicted rate of increase in Australia's unemployment would be consistent with
The definition of a recession is not clear-cut, but the RBA defines it as a period of negative or weak growth in economic output, typically highlighted by negative gross domestic product (GDP) figures.
A technical recession is generally considered to be two consecutive quarters of economic contraction.
AMP Capital chief economist Shane Oliver has previously said Australia has been in a "per capita recession" since March 2022, where economic activity per person has been going backwards.
What sectors would be at risk?
Deloitte surveyed 84 chief financial officers from Australia's top 200 companies, and Rumbens said the feedback was that the private sector had essentially entered a hiring freeze.
"There seems to be plenty of opportunities still for blue-collar workers, so construction and manufacturing workers in health care and education, those human services type workers, there are still opportunities," he said.
"But white-collar opportunities are particularly flat — finance, professional services, administration, that's the area where it's either flat or we're seeing some job losses."
Swinburne University lecturer in accounting, economics and finance Jason Tian said rising unemployment would hit sectors and segments of society unevenly.
"Women, who are disproportionately represented in part-time and casual work, ," he said.
Older workers, typically more expensive to employ, were more likely to face long-term unemployment and age discrimination in a weaker labour market.
Employers may be reluctant to take on young workers, especially those just entering the workforce.
"Policymakers must consider the diverse and unequal effects of their decisions on different segments of the population," Tian said.
, retail, and hospitality are usually the hardest hit by an economic slowdown.
Yet a focus on home-building and infrastructure should keep construction workers in high demand, with Deloitte forecasting a 2 per cent expansion in the blue-collar workforce — 74,300 workers — this financial year.
In the same period, the group forecasts a dip in white-collar jobs of 0.4 per cent, or 23,599, as businesses "look to kickstart activity without increasing headcount".
White-collar employment growth should return in 2025/26 and is tipped to rise 1.6 per cent.
Deloitte expects strength in health, education and other non-market job creation to endure and support an increase of 1.69 per cent, or 96,700 workers, in human services employment.
With reporting by the Australian Associated Press.
