Retail sales are rising. Retail employment is falling.
Australian retailers generated more income and value added in 2024–25 despite employing 8,000 fewer people. But the productivity story is more complicated than it first appears.
Something interesting is happening in Australian retail: the industry is getting bigger, but it is employing fewer people.
New Australian Bureau of Statistics data show retail trade total income increased 2.8 per cent in 2024–25, while industry value added rose 3.2 per cent and EBITDA increased 4.4 per cent.
Yet employment fell by 8,000 people, or 0.5 per cent, to about 1.49 million.
At first glance, that looks like a textbook productivity story: more economic activity being generated with fewer workers.
There are good reasons to think the structure of retail is changing in that direction. The ABS reports particularly strong earnings growth of 32.2 per cent in non-store retailing and commission-based retailing. Its new retail data also show that $78.8 billion of goods sold by retail trade businesses were sold online.
Technology, self-service, automated warehouses, online ordering and increasingly sophisticated logistics can allow retailers to process more transactions without a corresponding increase in shop-floor employment.
But there is an important qualification.
Productivity is not simply sales divided by the number of employees. Sales and income are measured in dollars and can rise because prices rise. Proper productivity measures compare the volume of output with the labour and capital required to produce it.
On that measure, the story is less flattering. The ABS estimates that retail trade multifactor productivity fell 1.7 per cent in 2024–25.
So the latest data reveal two things at once.
Australian retail appears to be becoming less labour intensive: income and value added are rising while headcount falls. But converting that structural change into sustained economy-wide productivity growth remains a harder task.
That distinction matters. Cutting labour per dollar of sales is efficiency. Producing more real output from the economy’s available labour and capital is productivity.
| Australian retail: more activity, fewer workers | |
| Retail trade, 2024–25 annual change | |
| Total income | +2.8% |
| Industry value added | +3.2% |
| EBITDA | +4.4% |
| Employment | −0.5% |
| Change in employment | −8,000 |
|
But the official productivity measure tells a different story
Retail multifactor productivity: −1.7%
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| Rising dollar income with fewer employees indicates a less labour-intensive retail model. Productivity, however, measures real output relative to inputs rather than simply sales per employee. | |
| Source: ABS, Australian Industry 2024–25; Estimates of Industry Multifactor Productivity 2024–25. | |