This article was originally published by Melbourne Chamber member Indeed and reflects the author’s views.

We spoke with Callam Pickering, Senior Economist at the Indeed Hiring Lab for Australia, about Indeed’s latest 2024 Jobs & Hiring Trends Report to discuss emerging insights into the current job market and the future of work in Australia.

Australian labour market outlook

“Despite a challenging economic environment, Australia’s labour market held up remarkably well throughout 2023. However, with labour demand easing and population growth strong, we expect labour market conditions to loosen throughout 2024,” says Callam.

1. Labour demand easing

Australia’s labour market remains tight by historical standards, with the unemployment rate still below 4 per cent. But imbalances between labour demand and supply seem to be gradually easing – highlighted by a falling number of Indeed job postings, job vacancy rates, and record population growth last year.

Overall, we expect the labour market to remain tight this year, but not as tight as was common throughout the post-pandemic job boom in 2022 and 2023.

From a recruitment perspective, it’s good news for employers. But there’s reason for cautious optimism. Despite job posting rates falling, these figures remain above pre-pandemic levels in 96 per cent of job categories. And while job vacancy rates have dropped to 2.6 per cent, it’s still almost twice as high as what was considered normal in the decade prior to the pandemic.

2. Labour market still favours jobseekers

While demand and supply factors are moving in favourable directions for recruiters, there are still widespread talent shortages. This means the labour market is still favourable to job seekers, and somewhat challenging for recruiters.

Australia has experienced an unprecedented job boom in the aftermath of the pandemic, but its impact has been far from even. To a large degree, it’s been dominated by one industry: healthcare and social assistance.

There are six industries where employment remains below pre-pandemic levels. Taking this into consideration, how much talent is actually out there?

As it turns out, talent is available, and they’re looking. According to the Australian Bureau of Statistics, there’s been a lot of movement between jobs, with 2.9 million people starting their current job in the past year. Currently, there are 1.8 million Australians not working, but are seeking work. Of those, 1 million people are ready to start work immediately.

For recruiters to attract and retain them, it may mean addressing common barriers to participation. According to the ABS, the biggest barriers to workforce participation include: education commitments, childcare responsibilities, and ill health or disability. Organisations with strategies to address these challenges will be better placed to attract talent.

3. Cost of living remains a key economic challenge

One of the biggest challenges facing the Australian economy is the current cost-of-living crisis. While Australian wages rose by 4 per cent last year, these hard-won gains fell short of a 5.3 per cent increase in consumer prices.

Some workers have responded to the higher cost of living by working more than one job, with this rate reaching an all-time high of 6.6 per cent last year. The impact of high inflation on the broader economy was lessened by the recent job boom, which has provided opportunities for people to either find new, higher-paying roles, or additional jobs.

Inflation-adjusted wages have begun rising and should continue to increase this year. But the damage caused by the cost-of-living crisis has been so large that a full recovery may take an extended period of time, perhaps 5-10 years.

For organisations with stagnating wage growth, recruitment teams may grapple with increased turnover as employees turn to competitors for better incentives.

4. AI adoption impacting the job market

Generative artificial intelligence (AI) and large language models (LLMs) are on the rise, with the greatest potential to fundamentally change the nature of work. Approximately 21 per cent of Australian job postings have a high exposure to generative AI – meaning these tools can perform at least 80% of the skills required to do the job at a good or excellent level. A further 56 per cent of job postings had moderate exposure.

“But ‘high exposure’ isn’t necessarily a bad thing,” Pickering clarifies. “These jobs are also those where workers are most likely to benefit from these tools. When utilised effectively, they can benefit individual productivity and enable people to perform more business-critical tasks. Strong productivity growth typically lends itself to higher wage growth, so AI tools also present people in these roles with opportunities to earn more.”

5. Top strategies for unlocking talent in 2024

To attract external talent, recruiters need effective job advertisements and to reduce barriers to employment. To unlock internal talent, organisations need to help existing team members reach their full potential. Three trends are leading the way for unlocking talent this year.

Flexibility

According to Australian Bureau of Statistics (ABS) data, flexibility is a leading incentive for people to join the workforce. In particular, carers with dependent children are primarily seeking flexible start-finish times, part-time hours, and greater certainty around working hours. These incentives are closely followed by greater access or financial assistance with childcare.

Embracing DEIB

More organisations recognise the value of embracing diversity, equity, inclusion, and belonging (DEIB). Research shows that companies with diverse teams tend to grow faster and be better at problem-solving. And it’s an important factor for recruiting and retaining staff too. According to Indeed’s DEIB Survey 2023, eight out of 10 job seekers say it’s important that the organisations they apply to promote diversity and inclusion.

Despite its growing recognition, Indeed’s survey found that DEIB often wasn’t a major priority for Australian employers - compared to employee mental health and wellbeing, company growth and improving employee benefits. What’s interesting though is how often DEIB is central to achieving these other priorities. It’s clear, then, how employers that make this a priority will put themselves in a good position to thrive this year.

Pay transparency

There’s been a shift towards greater pay transparency, both globally and in Australia. 37 per cent of Australian job postings on Indeed feature pay information. And as it turns out, providing pay transparency appears to be a smarter approach to recruitment – jobs with pay information receive 30 per cent more application starts on average than the same jobs without.

However, a reluctance to change advertised pay may limit the value of pay transparency. According to a report from Jobs and Skills Australia, employers rarely change advertised pay in order to find more candidates. In fact, they’re more likely to give up on filling a role or restructure their organisation than offer higher wages on an advertised job.

“Some employers are using pay to differentiate themselves, which, understandably, reflects the stronger competition for talent. Of course, there are complexities to this. But if you have flexibility in this area, it’s something that can give you a stronger advantage in the market,” says Pickering.

Navigating the road ahead

Overall, labour demand and supply dynamics suggest recruitment should become a little easier this year. However, it may still be more challenging than it was prior to the pandemic. Talent shortages still exist, but not to the extent they used to be. It’s still a job market that’s favourable to job seekers.

When it comes to addressing recruitment challenges and unlocking talent, there’s hope for recruiters. There is still plenty of talent out there, with millions of people changing jobs or entering the workforce each year.

Australia’s workforce continues to change each year – growing older and becoming more diverse. So it’s important for organisations to recognise and adapt to those changes. Embracing diversity and inclusion, pay transparency, and flexibility are great ways to attract more candidates and stand out from competitors.

For more insights, visit the Hiring Lab to read the full report.