By Shane Wright
Australia now has a million bureaucrats despite the federal and state governments vowing to find new ways to lift productivity and encourage the private sector to get the economy growing.
New figures from the Australian Bureau of Statistics released on Thursday revealed there were a record 990,000 people directly employed during May in public administration and safety, a jump of almost 50,000 over the past year.
While the sector includes people employed in the defence forces, state police forces and private security, the vast majority of its growth has come from a jump in those employed in government administration.
The federal government is holding a three-day productivity round table in Canberra in August in a bid to find new ways to lift the rate at which the economy and living standards can grow. Governments of the nation’s most populous states, NSW and Victoria, have vowed to cut red tape and reduce public servant numbers respectively.
Over the past year, the country added 326,500 jobs, with 15 per cent of those in public administration.
While public sector administrators grow in number, the private sector’s office staff has remained relatively stable around the 420,000 mark.
The proportion of the workforce in public service positions has hovered around 6.7 per cent since Anthony Albanese won office in 2022. But other publicly funded areas have soared, led by healthcare and social services, which includes the rapidly growing National Disability Insurance Scheme.
In May, an all-time high of almost 2.4 million people worked in this sector, accounting for more than 16 per cent of the nation’s workforce.
About 370,000 people have gone into this sector over the past three years, accounting for two in five of the 1.1 million jobs created during Albanese’s first time in office.
One of the growth areas has been in hospital staff, which over the past year has grown by 13 per cent to more than 600,000.
Together with education, which added 50,200 workers over the past year, the non-market part of the economy accounted for 73 per cent of the jobs created since May 2024.
According to NAB senior economist Tapas Strickland, 68.3 per cent of the entire workforce is now employed in areas dominated by the private sector. In mid-2019, the proportion was 72.2 per cent, and in 2008 it was more than 76 per cent.
Outside of healthcare, the fastest-growing jobs sector has been professional services, accounting for a fifth of the new positions created since 2022. It is the second-largest employment sector in the economy after healthcare, just ahead of the retail sector, which has reached an all-time high just short of 1.4 million.
Treasurer Jim Chalmers this week noted that while inflation had subsided and unemployment had remained low, the economy needed more input from the private sector.
“We want to see the private sector play a bigger and bigger role as growth gathers pace in our economy,” he said.
“We’ve got some reforms under way, but we know that we need to do more, and we think the best way to work out what to do next is to do that together, and that’s what the economic reform round table is all about.”
State and federal Labor governments have added to their public service ranks in part because they have cut spending with consultancies, arguing permanent staff deliver better advice.
Separate bureau data does suggest the private sector may be looking to hire more staff.
There were 339,400 job vacancies across the country in May, an increase of almost 10,000 since November.
Of the vacancies, there was a 3.2 per cent lift in those sought by the private sector to 301,900. There was a 0.6 per cent increase in the public sector.
The number of vacancies in the construction sector jumped by 20 per cent over the past three months.Credit: Arsineh Houspian.
KPMG senior economist Terry Rawnsley said it was encouraging to see a lift in job vacancies in the private sector, with a 20.5 per cent jump in the construction sector, a 12.6 per cent increase in professional services and a 5.1 per cent improvement in financial services.
He said the figures also confirmed big swings across the states, with vacancies falling by 3.4 per cent in NSW but surging 7.9 per cent in Victoria.
“We are still seeing patchwork growth patterns across the states, and not broad-based strength across the country, but the labour market has demonstrated remarkable resilience, with almost 330,000 additional workers in the past year alone,” he said.
But the right-leaning Institute of Public Affairs think tank said the vacancies had now been above 300,000 for four consecutive years.
Institute research fellow Saxon Davidson said the nation’s poor productivity performance would continue without reforms to the welfare system, such as the high tax take from pensioners, veterans and students who earn more than $200 a week.
“Chronic worker shortages hurt economic productivity because businesses cannot create wealth and invest in the economy without the workers they need,” Mr Davidson said.
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