Australian SMBs continue hiring despite interest rate headwinds

SYDNEY, 26 March 2026 – Australian small and medium businesses are defying economic headwinds, with hiring activity up 6.8% year-on-year despite consecutive interest rate hikes and softening consumer confidence, according to the latest Employment Hero Jobs Report. 

The report, which analyses employment data from over 350,000 businesses and 1.5 million employees, reveals that SMEs are adapting to uncertainty by shifting hiring strategies rather than freezing recruitment altogether. Interestingly, the 6.8% growth rate is one percentage point higher than the same period last year. This is despite the fact that we’re seeing significant macroeconomic pressures across the economy and other market indicators, like the business confidence indexes, down. 

Casual employment surged 9.4% year-on-year, more than double the growth rate of full-time roles (4.2%), which continues a long-term trend of businesses prioritising workforce flexibility as they navigate an unpredictable economic landscape.

“Australian SMBs are resilient,” said Ben Thompson, CEO and Co-Founder, Employment Hero. “Rather than retreating, they’re adapting. Businesses are continuing to show preference for casual workers despite the fact that casual workers tend to be more expensive due to holiday and weekend rates. Flexibility is a top priority for business owners, and they’re building it into their workforce planning.”

AI literacy becomes a workplace expectation

Employers are increasingly looking for non-technical candidates with AI capability in their job listings, according to Employment Hero’s data. Plus, growth in AI jobs has increased 13 fold since Q4 2024, with Machine Learning Engineer being the most in-demand AI role.

In Q1 2026, only 25% of the job listings that mentioned AI in the description also include AI in the job title; whereas 75% are non-AI roles like customer service, marketing, healthcare, and accounting. ‘Generative AI’ is the dominant term used by employers, they are looking for generalists who have AI capability that can turbocharge their business.

“We’re watching AI literacy become the new digital literacy. A decade ago, every job required basic computer skills. Now we’re seeing the same shift with AI. This is honestly great news for job seekers, particularly those with non technical backgrounds. Employers aren’t insisting on technical qualifications. They’re just looking for people who’ve upskilled with AI and will provide leverage to their business” said Thompson.

Construction, agriculture and engineering lead the surge 

The data reveals a few standout winning industries. Construction and trades employment grew 9.5% year-on-year, with wages in the sector jumping 3.0% month-on-month, the strongest monthly wage growth of any industry.

“Multi-billion dollar infrastructure projects are creating fierce competition for skilled workers, and that’s flowing straight through to pay packets,” Thompson said. “Tradies are in the box seat right now.”

Administrative and office support roles surged 16.2% year-on-year, while engineering positions grew 14.3%, reflecting sustained demand for project delivery and operational support. Plus, agriculture, mining and energy saw a healthy 11.9% jump in employment and a 6.3% pay bump year-on-year.  

Real wages rising

Workers across the economy are experiencing real wage gains, with average wages up 5.4% year-on-year and 0.1% month-on-month, outpacing inflation. However, wage growth has slowed slightly compared to the same time last year. Call centre and customer service roles (+7.9% YoY),  real estate (+7.2% YoY) and government and defence (+8.1%) recorded strong wage growth, while education (+1.7% YoY) and administration (+2% YoY) saw the smallest gains.

Thompson concludes: “If anyone still doubts the backbone of the Australian economy, look at the data. SMEs aren’t waiting for perfect conditions; they’re hiring, increasing wages, and getting on with it.”

For the more details on the Jobs Report, visit Employment Hero Jobs Reports.