Australia's Unemployment Rate Predicted To Hit 4.5% As Hiring Freeze Looms

Australia's unemployment rate is expected to peak at 4.5% over the next 12 months, as the private sector is entering a hiring freeze, signaling the country could be on the path toward recession, a new report has revealed.

Based on the survey by the accounting firm, Deloitte, 101,500 Australians could become jobless in the next one year, taking the unemployment rate from the current 4.2% to 4.5%.

In addition, companies were focused on upskilling their current employees to ensure they were prepared to take on new roles, leading to more Australians queuing up for jobs, reported ABC News.

"Companies are focusing, at the moment, more on their retention strategy than attraction," Nicole Gorton, director of human resources consulting firm Robert Half, said. "So if they have the opportunity to ... upskill because there's an opportunity gap with somebody and they can plug that with the existing staff, they will do that."

As the unemployment rate worsened, economists pointed to the onset of recession without government support.

Deloitte surveyed 84 chief financial officers, who were in charge of the books, from Australia's top 200 companies. These chief financial officers confirmed the private sector was entering a hiring freeze.

Canberra University economics professor, Leonora Risse, said these numbers indicate the "Sahm Rule" recession indicator. The indicator calculates the average unemployment rate over the past three months. If this average exceeds the lowest unemployment rate of the past 12 months by 0.5 percentage points, it suggests that the economy has entered a recession or is moving toward one.

"But if we look at the Australian data, if we plug those numbers into the formula, it's telling us that the rate of increase in Australia's unemployment rate would be consistent with a pattern that's heading towards a recession," Risse said.

The numbers should serve as a warning so as to take preventive action, she added.

According to an AAP report, the rising unemployment will hit the older, younger and women the hardest.

Women, who have part-time jobs, older hands who are expensive to hire and the young entering the workforce are the most impacted during economic downturns, Swinburne University lecturer in finance Jason Tian said.

Though sectors like construction could prove vulnerable during a slowdown, Deloitte forecast a 2% expansion in the blue collar workforce, that is 74,300 workers, this financial year, due to demand for home-building and infrastructure.

However, the data indicates a dip in white-collar jobs by 0.4%, or 23,599 as businesses head for a hiring freeze. The white-collar employment growth is expected to rise by 1.6% during 2025/26. Deloitte also predicted an increase of 1.69% or 96,700 workers in health, education and other non-market jobs.

"That means the labor market may continue to get worse with unemployment rising at the same time economic green shoots are appearing elsewhere," Deloitte Access Economics partner David Rumbens pointed out.