Data shows casual hiring at a 13-month low, even as South Australia bucks the national slowdown in job growth
Casual employment across Australia fell 0.7 per cent month-on-month (MoM) in July 2026 – the weakest monthly result for casual workers in 13 months – according to Employment Hero's latest Jobs Report.
The data, drawn from payroll records covering more than 23,000 small and medium-sized businesses (SMBs) and 1.7 million employees nationally, points to a broader cooling in the country's SMB labour market, even as South Australia recorded the strongest state-based employment growth in the country and New South Wales slipped into negative territory.
Casual hiring hits a 13-month low
Overall SMB headcount contracted -0.1 per cent MoM in July, also the weakest monthly change across the 13-month reporting period. Employment Hero chief executive and co-founder Ben Thompson said the pullback reflects tighter cost discipline rather than a collapse in confidence.
"When businesses pull back on casual hiring, it's a clear sign they're being forced to scrutinise every dollar and ask harder questions about how they can stretch their resources further," Thompson said.
"It's been a hard year for Australian businesses, but we're not seeing them lose their ambition. Our quarterly pulse check of business leaders found more than half remain positive about the next six months. The challenge is turning that confidence into capacity. I hear from businesses every day that are under pressure to lift productivity, reduce staff burnout and be more selective about where they add headcount."
States diverge as South Australia leads growth
South Australia bucked the national trend with 0.7 per cent MoM employment growth, the strongest of any state, while New South Wales fell into negative growth at -0.4 per cent MoM. Wage outcomes were similarly uneven.
Queensland recorded the strongest monthly wage growth nationally at 1.8 per cent MoM, alongside solid annual growth of 4.5 per cent year-on-year (YoY), with average hourly wages of $46.80 closing in on New South Wales' $47.20 despite New South Wales' slower annual growth of 3.8 per cent.
Tasmania posted the country's strongest annual wage growth at 5.5 per cent YoY, though it continues to record the nation's lowest average hourly wage at $42.90. Nationally, wages rose 1.2 per cent MoM in July – a second consecutive month of growth – but annual wage growth eased to 4.2 per cent YoY, the lowest level recorded across the 13-month reporting period.
The figures track closely against the Australian Bureau of Statistics' wage price index data for the June 2026 quarter, which similarly recorded annual wage growth easing to 3.2 per cent.
Younger workers buck the slowdown
Employees aged 18 to 24 defied the broader slowdown, recording the strongest employment growth of any age cohort at 0.9 per cent MoM, and leading the nation on wages with earnings up 1.7 per cent MoM and 8.0 per cent YoY – the second consecutive month this cohort has led on both measures.
Productivity, not headcount, holds the key
Thompson linked the casual pullback partly to the 1 July 2026 rollout of Payday Super, which required many employers to fund real-time superannuation contributions while simultaneously clearing their fourth-quarter obligations under the old system.
"Casual labour is the immediate pressure valve for a business managing cost spikes, and July delivered a major one with the rollout of Payday Super," Thompson said.
"Many businesses faced a 'double super' cash outlay during the month – clearing their Q4 quarterly super obligations while simultaneously funding real-time super contributions under the new rules. When employment costs jump like that in a single month, flexible headcount is where operators trim first to absorb the hit."
He said the deeper issue was a stalled productivity outlook, with Australian labour productivity growth sitting at roughly 0.7 per cent annually and SMBs operating at around 53 per cent of large-firm productivity levels. Thompson pointed to how Australian businesses are approaching AI adoption to close that productivity gap as the more durable fix.
"We are entering the era of 'productive growth'. For years, the default response to business expansion was adding headcount; today, it's about driving higher output per head," he said.
"The real winners won't be the organisations using AI just to draft basic emails or internal memos. They will be the HR and business leaders who embed smart automation into their everyday workflows, eliminating red tape, streamlining payroll and compliance and freeing their people to focus on high-value, strategic work."
Thompson said hiring was unlikely to return to 2023–24 levels until productivity gains catch up with wage growth, a dynamic that also intersects with the casual employee conversion rights introduced under recent industrial relations reforms.
"Wage growth without matching productivity gains just guarantees the next round of hiring caution," he said. "As inflation stabilises and businesses gain relief from compliance friction, we expect hiring to pick up gradually, but the hires being made will be far more targeted."
