Editorial: Private sector job creation is too slow

The Australian

04-08-2025

In today's workplace climate, trench warfare between unions and business will not help lift the skills base and drive better productivity to the benefit of workers' living standards and companies' profits. One issue that needs to be addressed is the alarming collapse in private-sector job creation, reported by Simon Benson on Monday.
While employment figures appear buoyant on the surface, labour market data shows that more than four out of five jobs – 82 per cent – created across the past two years were government-funded positions, either public service positions or jobs in the non-market sector (often in the care economy and in healthcare and education), funded by taxpayers and driven by government spending decisions.
The data marks a dramatic reversal of normal labour market patterns in which the private sector typically contributes about two-thirds of total job creation in Australia.
The trend suggests effective stimulus of the private sector, at minimal cost to taxpayers, could be beneficial: through workplace reforms, relief on payroll tax (levied by the states) or changes to work-from-home rules. Popular as working from home is with many staff, especially those with long commutes, it is problematic for many businesses.
That is clear from reactions on Tuesday to Victorian Premier Jacinta Allan's plan to enshrine in law the right for private and public sector employees to work from home two days a week if they can do their jobs at home.
Business NSW chief executive Daniel Hunter said Victoria's proposed 'blanket rule on WFH' would make it 'harder and less appealing' to do business. NSW (where Premier Chris Minns wants government workers in the office as least three days a week) 'may well be the beneficiary of that', Mr Hunter said. Working from home should be a matter for employers to manage in consultation with staff, he said: 'More red tape doesn't help. Government mandates about WFH create a one-size-fits-all approach to productivity. To grow our collective prosperity, we need to ensure that businesses are given the opportunity to thrive and deal with their workforce directly.'
That applies to other workplace issues, too. South Australian Business Chamber chief executive Andrew Kay said investors were looking for a more welcoming environment for their capital. Victorian Chamber of Commerce and Industry chief executive Paul Guerra warned of businesses moving interstate.
The issue should be pursued at the roundtable. IR policies also might be influenced by a Productivity Commission report to be published next Monday, Building a Skilled and Adaptable Workforce. Anthony Albanese said on Monday that he and his ministers were the ultimate decision-makers and would not be shackled by ideas being pushed by the commission or unions.
On the basis of ACTU arguments and the commission's net zero and business tax reports, the roundtable is at risk of becoming a conduit for higher tax, bigger spending and bigger government. Those trends are already driving unsustainable labour market distortions, with a major shift to jobs funded through budget spending.
As Australian Industry Group chief executive Innes Willox told The Australian, job creation has become unsustainably dependent on governments. While the public sector was the least productive part of the economy, growing regulation had raised the costs of private sector job generation, he said. Job mobility had declined while excess vacancies and skills shortages had disrupted businesses.
The fact the private sector added just 53,000 new jobs last year while government-supported sectors added 670,000 jobs over two years points to the need for workplace and productivity reform. As Mr Willox said, the issue must be part of roundtable debate.