Post-Holiday Reality Check: Wage Growth Stalls, Hours Nosedive as SMEs Tighten Belts

SYDNEY – February 15, 2025: The summer hiring spree is over, and the numbers are in—January’s labour market is cooling fast. Employment Hero’s latest SmartMatch Employment Report (SMER) shows wage growth slowing, employment momentum shifting, and hours worked taking a major hit.

Small businesses are pulling back after the holiday rush, prioritising flexibility over expansion as they navigate rising costs and economic uncertainty.

The Numbers:

📉 Median hourly wage: $41.20 (up 4.3% YoY but down -2% MoM)—the festive-season boost is fading.
📉 Hours worked: Down a steep -6.1% YoY and -6.5% MoM, the biggest drop in months.
📈 Employment growth: Up 6.8% YoY and 1.1% MoM, but casual work is driving the gains while full-time hiring slows.

Ben Thompson, CEO of Employment Hero, calls it a post-holiday correction:

“We’re seeing businesses hit the reset button after the holiday hiring rush. Wage growth is stabilising, but the sharp drop in hours signals that SMEs are feeling the squeeze. They need flexibility, and they’re choosing more casual hires over full-time commitments.”

Casual Boom, Full-Time Fizzle

• Casual employment is surging (+13.8% YoY), but hours worked have crashed (-27.2% YoY). Businesses are hiring, but they’re spreading fewer shifts across more people.
• Full-time wage growth is slowing, down to 3.3% YoY (from 7.0% in December). NSW and VIC, two of Australia’s biggest employment hubs, are seeing high-demand industries lose steam.
• Part-time work is barely growing (+4.1% YoY), showing a clear divide: workers are either all in or keeping it casual.

Gen Z Takes the Biggest Hit

It’s not a great time to be a young worker. Hiring in the 18–24 age group is stalling (+2.5% YoY), and the youngest workers (14–17) saw hours slashed by -24.4% YoY—a brutal reality check for teens hoping to land a summer gig. Meanwhile, workers 45+ are making gains (+6.1% YoY), suggesting experience is winning out.

Retail Feels the Crunch While Construction Holds Strong

• Retail jobs edged up just +4.1% YoY, but hours worked plunged -11.3% YoY—a clear sign that businesses are trimming shifts post-holidays.
• Construction hiring remains strong (+6.3% YoY), showing ongoing demand despite economic uncertainty.
• Tech wages slipped (-1.2% YoY), but hiring is still growing (+5.1% YoY).
• Healthcare stays steady, with wages up 4.5% YoY and employment growing 4.6% YoY.

Regional Shake-Up: Who’s Winning?

• Queensland is the employment leader (+7.7% YoY), while South Australia tops wage growth (+6.4% YoY).
• Tasmania is the only state seeing job losses (-3.1% YoY).
• Every state saw hours drop, with SA taking the hardest hit (-10.3% YoY).

Looking Ahead

With small businesses under pressure, hiring is likely to remain conservative in the short term. But as economic conditions shift, high-demand sectors like construction and healthcare will continue driving job growth.

Thompson’s takeaway?

“Businesses are being careful, but they’re not stopping. The way they hire is changing—expect more casual flexibility, and slower full-time wage growth, at least for now.”