Green shoots despite soft economy: hiring and wages rise, but hours continue to fall

Sydney, Oct 15, 2025 – Employment Hero’s latest September Jobs Report shows early signs of labour absorption despite a weak macro backdrop. 

Unemployment has climbed to its highest since November 2021, yet Employment Hero data shows SMEs are still increasing headcount and hourly pay. The one area experiencing a decline is hours worked, which has seen abysmal movement throughout the year. 

This shift is unfolding as inflation sits at the top of the RBA’s target band and interest rates are on pause for the second month. Business confidence remains fragile and households report mounting financial pressure, yet employers appear to be selectively hiring and lifting hourly rates to secure required capability.

Ben Thompson, co-founder and CEO of Employment Hero, said the labour market divide makes this moment important to watch.

“Recent headlines would make any Australian feel uneasy about the state of the labour market and that is showing up in behaviour. But our data shows it’s not all doom and gloom. Employers are lifting headcount at a faster pace and offering higher hourly pay to secure capability. In fact, wages are growing faster than inflation despite CPI increasing to 3%. We call this ‘wageflation’; it’s good for workers struggling with high costs, but it puts additional pressure on small businesses.

What’s more puzzling is we have not seen a meaningful improvement in hours worked for months. It could signal the productivity drag that has been building across the economy or it could be the first sign that AI and automation are enabling the same output in fewer hours. The shape of work is shifting even if the macro picture still looks fragile.”

Key highlights:

• Employment rose 5.5% YoY, 1.9% QoQ and 0.8% MoM
  • Casual employment grew 8.8% YoY but casual hours declined 2.0% YoY
  • Construction and trade led employment growth (+7.6% YoY)
  • Youth employment boom continues: Teen employment climbed 23.9% YoY and 18–24 employment rose 7.0% YoY
• Wages rose 5.0% YoY to a median $45.20, +2.6% QoQ and +0.5% MoM
  • Wages grew fastest in construction and trade (+6.2% YoY) and science and tech (+5.5% YoY)
• Hours worked fell 0.2% YoY and 0.6% MoM
  • 18-24 year olds increased hours 4.4% YoY despite the national decline

Thompson said employers will start competing on retention and capability rather than volume.

“We are in a risk-averse, side-hustle economy. Many workers are ‘job-hugging’, or choosing security over ambition due to the state of the market. The employers that win from here will be those that can offer stability, internal mobility and genuine productivity gains, not just headcount growth.”

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