“The explosion in public sector employment is a worrying sign for the true health of Australia’s 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.
Today, new IPA research reveals the worrying, rapid post-pandemic expansion in the size Australia’s public sector, which dwarfs the creation of private sector jobs. The IPA’s analysis of Australian Bureau of Statistics’ Labour Force detailed data shows;
- Between August 2014 and August 2022, 76.5 per cent of new persons employed were in the private sector.
- Post-pandemic, between August 2022 and August 2024, 82.1 per cent of new persons employed were in the public sector.
- The total number of new public sector jobs created in the two years between August 2022 and August 2024 (658,000) is already 40 per cent higher than the public sector jobs created in the eight years between August 2014 and August 2022 (475,800).
- Between August 2014 and August 2024, the share of the workforce employed in the public sector increased from 12.5 per cent to 17.9 per cent.
“Such large increases in public sector employment are masking the fundamental weakness in Australia’s labour market and economy,” said Mr Clark.
“Only the private sector can drive meaningful and sustained economic growth. Yet, in the post-pandemic period the private sector is being crushed by ever-growing bureaucracy and regulation.”
“Many of the commonly reported labour market metrics are broad in scope and lack detail. This means they do not accurately reflect how the Australian labour market is performing. What the IPA’s analysis shows is that Australia desperately needs a new economic direction,” said Mr Clark.
“While frontline public sector jobs play a key role in maintaining a civil society, many bureaucratic roles are inefficient and counterproductive. These roles restrict, rather than expand, economic output and are an increasing burden on taxpayers.”
Since the pandemic, New South Wales, Tasmania, the Northern Territory and the ACT have only seen net employment growth in the public sector, as net private sector employment has declined in each jurisdiction. Western Australia, meanwhile, had the strongest private sector jobs growth with 48.9 per cent of jobs created in the private sector post-pandemic.
“The IPA’s research shows that over half a million additional public sector workers were added in the August 2024 quarter alone – 60 per cent higher than the previous record in the November 2018 quarter,” said Mr Clark.
“This is a clear signal that the public sector employment splurge will not end anytime soon.”
Recent IPA research found that during the Albanese government’s term, government spending has grown in an unacceptable and irresponsible manner – now accounting for 55 per cent of gross domestic product growth. Spending at all levels of government today is $129 billion higher than a decade ago.
“In light of Australia’s ongoing cost-of-living crisis, governments at all levels need to prioritise policies that will help the private sector create new jobs, rather than merely growing their own departments,” said Mr Clark.
To download the IPA’s research click here.
