Australian Public Sector Leads Job Growth Post Pandemic

Employment advertisements are highlighted in a newspaper in Melbourne, Australia, on Oct. 9, 2014. Scott Barbour/Getty Images

The public sector continues to lead the creation of jobs in Australia post pandemic, which according to an economist, reflects a declining economy.

“This expansion, coupled with unprecedented levels of government spending, both fuelled by debt, is dragging Australia’s economy down,” said Lachlan Clark, research fellow at the Institute of Public Affairs (IPA).

Citing data from the Australian Bureau of Statistics’ (ABS) Labour Force, the IPA noted that 76.5 percent of new persons employed were in the private sector between August 2014 and August 2022.

Post-pandemic, 82.1 percent of new persons employed were in the public sector between August 2022 and August 2024.

Moreover, latest ABS data showed that the number of public sector jobs increased 2.7 percent in the September quarter, while private sector jobs only rose 1.4 percent.

“Only the private sector can drive meaningful and sustained economic growth,” said Clark. “Yet, in the post-pandemic period the private sector is being crushed by ever-growing bureaucracy and regulation.”

According to ABS, filled jobs in the public administration and safety industry climbed 10.5 percent year on year to 891,600, while filled jobs in the healthcare and social assistance sector jumped 11.4 percent to 2.6 million.

The Australian Institute of Company Directors (AICD) echoed similar concerns, noting that the total amount of money spent on goods and services by all public sector entities hit a record high of 28 percent of real GDP in the third quarter of this year.

This was up 3.5 percentage points relative to the 2019 December quarter and about five percentage points higher than its average share during the five-year period from 2015 to 2019.

Mark Thirlwell, chief economist at AICD, pointed out that while most of the increase in the filled jobs in the healthcare and social assistance industry took place in the private sector, some of these roles will still be backed by public funds.

“In the short term, the relative expansion of the public sector is partly a story about the cyclical state of the economy,” said Thirlwell.

“As private sector activity in the market sector has been squeezed by the RBA’s tight monetary policy, the public sector has kept the economy growing.”

Stephen Smith, partner at Deloitte Access Economics, emphasised the need for more private spending. Otherwise, it would be more difficult to achieve a stronger and more sustainable economic growth.

Per capita GDP slid by 0.3 percent in the September quarter, marking the seventh consecutive contraction in per capita growth.

“The Australian economy continues to be underpinned by public sector expenditure, with government consumption and public investment both contributing to growth in the September quarter,” said Smith.

“This dynamic provides further evidence of the two-speed economy emerging in Australia, where the public sector is expanding rapidly while the private sector struggles to achieve comparable gains.”