The Victorian labour market is strong
- Around 3.6 million people are employed in Victoria, up 754,800 people over the past decade. The unemployment rate remains very low at 3.7% while the participation rate of 67.6% is near record highs.
- Workforce shortages have eased from a peak but remain elevated. The job vacancy rate in Victoria was at 2.8% in May 2023, which is below the historical high of 3.5% in August 2022 but remains well above the three-year pre-COVID average of 1.7%. There are currently 1.3 unemployed persons for each job vacancy.
More than 350,000 new workers are expected in Victoria by 2026
- An estimated 352,000 new workers are expected by 2026 to meet demand from 137,000 new jobs and replace 215,000 retiring workers.
- Metropolitan Melbourne will account for 277,000 new workers while regional Victoria will account for 75,000 new workers.
- Around 64% of new workers will require higher-order skills, with most industries requiring new workers with higher-order skills.
- By industry, health care and social assistance, education and training, professional, scientific and technical services, and accommodation and food services will account for more than half of the 352,000 new workers expected over the next three years.
- By occupation, ageing and disability carers, general clerks, and registered nurses will account for the highest number of new workers expected over the next three years.
Influences on the Victorian labour market
- The number of new workers expected over the next three years is driven by the economic outlook, which has softened due to rising interest rates, higher cost of living, and a weaker global economic outlook.
- Workforce supply continues to be affected by issues such as the ageing population.
A few ideas to help us meet the demand for new workers
- The skilling and government response needed to help meet the demand for new workers is discussed in the Victorian Skills Plan for 2023 into 2024(opens in a new window). Further to what is covered in the plan, improved productivity, participation in education and employment and labour mobility will help Victoria meet its employment needs.
- Productivity growth can be driven by strengthening education and training, which will also alleviate skills shortages in the labour market. While labour productivity growth in Victoria has been slightly above the national average in recent years, opportunities for further increases exist by supporting businesses to innovate through adopting new business models, practices, and technology. Innovation will also drive new business activity and create new demand for different and higher-level skills due to the rapid technological change. Skill requirements increase as technology can replace more routine tasks, freeing up workers to focus on higher-skill activities.
- Despite the strong labour market, not all Victorians have been able to share the benefits of participating in the labour force and securing employment. There are currently around 498,000 potential workers in Victoria, including 139,600 individuals who are defined as unemployed. This means that there are approximately an additional 358,400 Victorians (of whom 204,100 can start work within 4 weeks) who can potentially contribute to the labour force and help address the significant labour and skills shortages. However, these individuals are not actively looking for work for reasons such as study commitments and caring responsibilities.
- Labour market mobility helps workers move to where new jobs are available and assists the economy to adjust to economic shocks and structural change.