One-quarter of the economy generated almost half of the growth in hours worked under Labor

Australia’s recent employment growth has been extraordinarily concentrated in industries dominated by government services and funding.

In the June quarter 2022, the Australian Bureau of Statistics-defined non-market sector accounted for just 25.7% of all hours worked in Australia.

Four years later, those industries had generated 46.3% of the entire increase in hours worked.

That is almost twice their initial share of the labour market.

Between June 2022 and June 2026, seasonally adjusted hours worked in the non-market sector increased 18.9%. Hours worked across the much larger market sector increased only 7.6%.

The non-market sector comprises health care and social assistance, education and training, and public administration and safety. It is not identical to the public sector — private hospitals and non-government schools are also included — but all three industries are heavily influenced by government spending, funding and service delivery.

The largest increase occurred in health care and social assistance, where hours worked rose 21.4%. Education increased 18.3%, while public administration and safety increased 13.8%.

The imbalance matters for understanding Australia’s economy.

Strong employment growth can make an economy appear resilient even when productivity and private-sector growth are weak. Since Labor came to office, a disproportionately large share of Australia's additional labour input has been absorbed by non-market activities rather than the market economy.

Put another way, the quarter of the economy most closely associated with government-funded services has produced almost half of the growth in hours worked.

That helps explain how Australia can continue generating strong headline employment numbers while struggling to generate stronger productivity and per-capita economic growth.

Method: Benchmark Analytics compares seasonally adjusted ABS Labour Account hours actually worked in the June quarter 2022 with the June quarter 2026. Using September 2022, Labor’s first complete quarter in office, produces an even larger divergence: non-market hours increased 17.0%, compared with 5.7% in the market sector.