Australia’s unemployment rate held steady in January at 4.1 per cent, but a complicated story is emerging beneath the headline number. 

Australian Bureau of Statistics data showed the number of people with jobs grew by 18,000 in January, with a rise of 50,000 full-time jobs partly offset by the loss of 33,000 part-time positions. There was a slight rise in underemployment, while hours worked were up 0.6 per cent.

The Labour Market Remains Tight But Has Momentum

Employment Hero CEO and co-founder Ben Thompson said that while having more people employed was a positive sign, the true measure of the market’s health lay in how effectively those roles were being used. “The ABS headline figures don’t fully reflect what’s happening in the SMB sector,” Thompson said. “More Australians in jobs tells us the labour market still has momentum. But the more critical information here is the continued increase in hours worked. When hours worked rises alongside jobs, it points to stronger utilisation, not just more people picking up small shifts.”

Thompson said it remained difficult for SMEs to secure and hold onto talent. “A steady unemployment rate tells us there is still fierce competition for jobs for those on the outside,” Thompson explained. He said businesses were looking for staff who could contribute immediately. “Experience and judgment are commanding a premium, particularly as employers look for people who can navigate complexity without hand-holding,” says Thompson.

A Key Demographic Is Working And Earning More

Exclusive data from Employment Hero’s January Jobs Report showed the average hours worked in SMEs reached 124.2 per month, an increase of 0.7 per cent year-on-year. Victoria led the states with a 1.3 per cent rise, mirrored by a 1.3 per cent rise in Melbourne. South Australia and Adelaide saw growth at 1.1 per cent and 1 per cent respectively, with Queensland and Brisbane close behind.

Some sectors performed more strongly than others. Retail, Hospitality & Tourism hours jumped by 2.1 per cent, while Construction & Trade Services saw a softening of 0.7 per cent.

The most striking trend was in demographics.“Our data shows hours worked by people aged 55 and over are up 1.2 per cent year-on-year,” Thompson explained. “That suggests older Australians are being pulled into roles where capability and judgement are harder to replace.” They were being paid more too. “Workers aged 55 and over are seeing the biggest wage gains at 5.9 per cent year-on-year, flipping the common assumption that wage growth favours younger workers,” Thompson noted.

SME Wage Growth Appears To Outpace National Level

Wage data also suggested a divergence between SMEs and the rest of the workforce.

“While ABS Wage Price Index figures may show wage growth hovering around 3.4 per cent for the private sector, the latest Employment Hero data shows those figures are much stronger for the SME sector,” Thompson said. “Across the hundreds of thousands of small and medium businesses on the Employment Hero platform, wages are up 5.3 per cent year-on-year.” Wage growth of 3.4 would be below inflation, most recently at 3.8 per cent, signalling an effective drop in real wages for many workers.

Wage growth was led by Western Australia and South Australia, up 6.3 per cent year-on-year. At a city level, Hobart was the standout, with an increase of 7.8 per cent, followed by Adelaide at 6.8 per cent and Perth with 6.5 per cent. By employment type, full-time and part-time workers saw 5.3 per cent growth, slightly up on casuals at 5 per cent.

Median wages for SMEs sat at $45.50 per hour.

Attention Returns Once Again To Interest Rates

While wage gains helped employees almost keep pace with inflation, they presented a significant challenge for business owners fearing further interest rate rises. 

“Coming off this month’s rate rise to 3.85 per cent, January’s number puts employers in an increasingly difficult position,” Thompson observed. “Wages are growing faster than official figures suggest, costs are rising, and the RBA is signalling rates will stay higher for longer.” The steady unemployment rate was also a factor, he said. “That is going to complicate the case for near-term rate cuts.”