Labour force participation rate

IBISWorld forecasts the labour force participation rate to increase by 0.22 percentage points in 2024-25, to 66.93%. The labour force participation rate has largely trended upward since declines occurred following the COVID-19 pandemic. A rising number of Australians are actively looking for work, fuelled by growth in the cost-of-living pressures. In a bid to get ahead of these rising costs, many young Australians are seeking to enter the labour force earlier. These factors are expected to drive growth in the labour force participation rate in the current year. Furthermore, the recent release of the 2024-25 Budget shows that the Government is aiming towards creating more jobs to strengthen the labour market. This is also expected to support growth in the participation rate in 2024-25.

The COVID-19 pandemic caused the largest fall in the labour force participation rate in 2019-20 since 1991-92, when Australia faced the early 1990s recession. The Federal Government's restrictions on inbound travel and non-essential activity in response to the COVID-19 pandemic constrained growth in the total labour force. In addition, many people that were suddenly unemployed were not actively looking for a job, due to the lack of available roles, which removed them from the labour force. The Federal Government's easing of the eligibility of the JobSeeker program has supported individuals suddenly out of work during the pandemic and reduced the urgency of unemployed people to try and find a new job. Despite the COVID-19 pandemic, the labour force participation rate has increased over the past five years. Significant structural changes have encouraged job creation in Australia. Legislative changes promoting flexibility in the workforce have supported rising employment over the period.

The trend of domestic manufacturers moving operations to countries with lower operating costs, particularly in Asia, has constrained overall manufacturing activity over the past five years. Many workers are either retiring early after losing their job or are not actively looking for work due to limited opportunities. These trends have limited growth in the participation rate over the past five years. Australia's ageing population has also constrained the hike in the labour participation rate over the period. People within the baby boomer generation are increasingly reaching retirement age and exiting the workforce. Overall, IBISWorld forecasts the participation rate to increase at an average annual rate of 0.37 percentage points over the five years through 2024-25.