4.0%: Australia's unemployment rate rises in December

Labour market resilient, but jobs growth relying on government spending, Ai Group says

4.0%: Australia's unemployment rate rises in December

Australia's unemployment rate went up to four per cent in December as the number of jobless people increased by 10,000, according to the latest data from the Australian Bureau of Statistics (ABS).

The latest Labour Force data from the ABS showed Victoria with the highest unemployment rate in December with 4.4%, followed by Tasmania with 4.2%. Other locations recorded:

  • Northern Territory (4.2%)
  • South Australia (4.2%)
  • Queensland (3.9%)
  • New South Wales (3.8%)
  • Western Australia (3.3%)
  • Australian Capital Territory (3.1%)

 

Employment also up

Despite the increase in unemployment, the ABS data also showed that employment increased by 56,000 people, growing by 0.4% in December and slightly higher than the monthly average of 0.3% in 2024.

With both employed and unemployed people increasing, the participation rate went up 0.2 percentage points to a record-high 67.1% in December.

"This was 0.5 percentage points higher than a year ago, and 1.6 percentage points higher than March 2020," said Bjorn Jarvis, ABS head of labour statistics, in a statement.

The employment-to-population ratio also increased to a new record of 64.5%, which is 0.5 percentage points higher than a year ago.

On the other hand, the underemployment rate fell to six per cent in December, with youth underemployment of 14.1% remaining higher than the overall population.

"Despite very sluggish economic conditions, the Australian labour market remained resilient in 2024," said Innes Willox, Ai Group chief executive, in a statement.

"Unemployment held at around 4.0% across the year, while participation continued to rise and underemployment pleasingly fell."

Government spending-dependent jobs growth

However, Willox noted that the recent jobs growth across Australia has been driven by the public sector and "non-market" private industries, such as health, education, and public administration.

Since 2019, employment in the public sector has increased by 17%, while non-private industries have surged by 43%.

The private sector, on the other hand, added only nine per cent of jobs.

"The weakness in the private market sector is also a cause for concern. These employers account for two in three Australian jobs but are struggling to grow in the face of weak economic conditions and surging business costs," Willox said.

He pointed out that a healthy labour market cannot rely on government spending, which shapes employment in non-market industries.

"When this taxpayer-funded jobs boom runs its course, we could find ourselves in a very difficult situation if the private sector engine still isn't firing," he said. "It is therefore imperative governments make restarting investment, job creation, and growth in the private sector a top priority for 2025."