The Australian labour market presently paints a picture of a Stable Unemployment Rate. The unemployment rate has hovered around 4.1 per cent in recent months, showing little dramatic movement. Despite this steadiness, the underlying dynamics of hiring and job availability are shifting. What once was a candidate-driven market, with plentiful vacancies and strong negotiating power for job seekers, is now giving way to a more challenging environment. Companies are becoming more cautious, competition among applicants is increasing, and many new job postings are for part-time or lower-hours roles rather than full-time, secure positions.
This evolving scenario is creating a disconnect between employer expectations and the current reality for job seekers. In many cases, the volume of vacancies has declined. While skills shortages persist in sectors such as healthcare, information technology, and the trades, the overall hiring momentum is cooling. The result is longer hiring processes and greater pressure on candidates to stand out.
Below, we unpack the major features of this transition, examine the data, and consider what it all means for employers and job seekers alike.
A Steady Unemployment Rate, But Hidden Weaknesses
On the surface, the headline unemployment figure conveys stability. In May 2025, the Australian Bureau of Statistics (ABS) reported the unemployment rate as 4.1 per cent, essentially unchanged from previous months. Full-time employment in that month increased by about 38,700 roles, offsetting declines in part-time work.
However, beneath that surface tranquillity, signs of cooling are evident:
- The number of job vacancies has fallen. A recent ABS report noted a 2.7 per cent decline in total vacancies from May to August 2025, with the ratio of unemployed to vacancies rising.
- Participation in the labour force has been softening in certain subgroups, meaning fewer people are actively seeking work. Some commentators interpret this as a sign that the market is losing momentum.
- Employers report it is taking longer to fill roles, and many are becoming more selective, adjusting their expectations downward or narrowing their candidate pools.
In other words, the unemployment rate may not yet have surged, but other labour market indicators suggest that the balance of power is shifting away from job seekers.
From Candidate-Driven to More Competitive Conditions
A few years ago, many industries experienced what could be called a candidate-driven market: high demand for labour, multiple offers to quality candidates, and a seller’s market in hiring. That environment awarded candidates leverage over pay and benefits.
Today, that’s changing. Several pressures are contributing:
- Vacancies shrinking, especially in private sector roles.
- More applicants per listing, increasing relative competition.
- Downscaling of role expectations, with some employers splitting jobs into part-time or fractional roles rather than full-time commitments.
- Stricter filtering, with employers raising the bar for qualifications, experience, or cultural fit even when the pool of skills is weakening.
Thus, candidates entering the market must now differentiate themselves more effectively, investing in refined resumes, portfolio evidence of achievement, networking, and soft skills to stand out.
Skills Shortages in Some Sectors — But Softening
While the broader job market is cooling, skill shortages continue to exist in areas where demand remains steady or growing. Healthcare, IT (especially advanced and specialised roles), construction, engineering, and the trades are frequently cited.
For instance:
- Despite rising applicant numbers, many occupations still struggle to fill roles, with the national fill rate across advertised jobs around 70 per cent.
- In information and communications technology, while shortages have eased somewhat, technical specialists, engineers, and teachers remain in demand.
- Around one-third of monitored occupations are still flagged as being in shortage nationally, down slightly from the previous year.
That said, even in these sectors, conditions are not as strong as before. Employers are more discerning than in the past, and many roles that were once taken for granted are now being scrutinised more intensely.
The Decline in Vacancy Volume and the Disconnect
One of the most noticeable changes is the drop in the overall volume of vacancies. With fewer job postings, job seekers face a thinner market. That shortage of opportunity intensifies competition and forces many candidates to lower expectations or settle for roles that may not ideally match their ambitions.
Employers, on the other hand, may not fully adjust their expectations downward. Some still expect polished resumes, high prior performance, or rare combinations of skills—even when those standards may have suited a stronger jobs market. This results in a disconnect between employer demands and the available candidate pool.
For example:
- Companies might still advertise roles requiring many years of experience, advanced qualifications, or multiple software proficiencies—even when fewer candidates meet those thresholds.
- Job seekers might apply only to “perfect match” roles and ignore ones that would actually be viable opportunities.
- As mismatches linger, roles stay unfilled longer, lengthening hiring cycles and increasing fatigue for both sides.
In short, expectations haven’t fully realigned to the evolving market reality, exacerbating friction in hiring outcomes.
Longer Hiring Processes and Higher Pressure on Candidates
With more applicants and fewer roles, hiring becomes a more resource-intensive process for employers. Screening, interviews, assessments, background checks, and shortlisting can drag out. That means job seekers may be kept in limbo longer, facing:
- Delayed feedback or multiple interview rounds before rejection or offer.
- Pressure to be proactive and persistent, following up and refining applications.
- Greater uncertainty about next steps, often juggling multiple parallel applications.
- The need to maintain flexibility, as some roles may shift or disappear during long processes.
Candidates must manage expectations, stay engaged, and position themselves strongly through networking, skill development, and clear presentation of their value.
What This Means for Employers and Job Seekers
Employers Must Adapt
To succeed in this evolving environment, employers should:
- Reassess role specifications and focus on essential versus “nice-to-have” criteria.
- Streamline hiring workflows to avoid losing good talent to drawn-out processes.
- Offer flexible arrangements such as part-time, job-share, or remote options.
- Invest in training and upskilling rather than expecting fully qualified candidates from the outset.
Job Seekers Must Be Strategic
To navigate this more competitive landscape, candidates should:
- Focus on developing specialised skills that match in-demand sectors such as healthcare, technology, and trades.
- Build a strong personal brand and professional network.
- Remain agile by considering part-time or contract roles that may lead to full-time positions.
- Be persistent, adaptive, and open to pivoting industries or roles to gain experience.
Looking Ahead
The labour market is in transition. While the headline unemployment rate remains stable around 4.1 per cent, that stability masks deeper shifts in hiring behaviour, vacancy numbers, and competition intensity. The market is moving away from a candidate’s paradise toward a tougher, more selective environment.
That said, skills shortages remain, particularly in sectors with strong structural demand. Those willing to align their capabilities, presentation, and persistence to the changed reality will still find opportunity—but perhaps differently than before.
For employers, adjusting expectations, streamlining recruitment, and investing in internal talent development will be essential. For job seekers, creativity, resilience, and strategic positioning will increasingly determine success.
In this evolving landscape, the disconnect between expectation and reality is the battleground—those who navigate it carefully may still emerge the winners.