Public Sector in Australia Sparks Job Growth Following Pandemic
An economist stated that the public sector taking the lead in job creation after the pandemic indicates a weakening economy.
The public sector in Australia continues to be the primary source of new jobs post-pandemic, signaling a downturn in the economy, according to an economist.
Lachlan Clark, a research fellow at the Institute of Public Affairs (IPA), expressed concern over the expanding public sector and record government spending funded by debt, dragging down Australia’s economy.
Data from the Australian Bureau of Statistics (ABS) Labour Force revealed that between August 2014 and August 2022, 76.5 percent of new jobs were in the private sector. However, from August 2022 to August 2024, 82.1 percent of new jobs came from the public sector.
Recent ABS data showed a 2.7 percent increase in public sector jobs in the September quarter, compared to a 1.4 percent rise in private sector employment.
Clark emphasized that real and sustained economic growth can only be driven by the private sector, which is currently hindered by excessive bureaucracy and regulations in the post-pandemic period.
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Filled jobs in the public administration and safety sector saw a 10.5 percent increase year-on-year, reaching 891,600, while the healthcare and social assistance industry recorded an 11.4 percent jump to 2.6 million filled jobs.
The Australian Institute of Company Directors (AICD) raised similar concerns, pointing out that public sector spending reached an all-time high of 28 percent of real GDP in the third quarter of this year, up 3.5 percentage points from 2019.
This share is about five percentage points higher than the average from 2015 to 2019, indicating a growing reliance on public sector expenditure.
Mark Thirlwell, chief economist at AICD, noted that although most new jobs in healthcare and social assistance were created in the private sector, some roles are supported by public funds.
Thirlwell highlighted the cyclical nature of the economy, where the public sector is compensating for contraction in the private sector due to tight monetary policies.
Stephen Smith from Deloitte Access Economics stressed the importance of increased private sector spending to achieve robust and sustainable economic growth.
Per capita GDP declined by 0.3 percent in the September quarter, marking the seventh consecutive period of contraction in per capita growth.
Smith pointed out that government consumption and public investment are key drivers of growth, underscoring the emergence of a two-speed economy in Australia with a rapidly expanding public sector and a struggling private sector.
