A new report from Deloitte Access Economics has revealed that Australians will find it increasingly difficult to secure new employment in 2026, but contrary to popular belief, artificial intelligence is not the primary culprit. Instead, the economic slowdown is the main factor behind the tightening job market.
AI's Impact on Employment
According to the quarterly report, AI is beginning to influence the national workforce, but it has not led to widespread job losses. Deloitte studied 82 roles classified as 'AI-disrupted jobs'—positions that require less human judgment, empathy, or interpersonal skills—and found that employment in these sectors continues to rise.
David Rumbens, partner at Deloitte Access Economics, stated that there is limited evidence of AI causing significant job losses. 'It could suggest that AI is currently playing more of an augmentative role in the Australian labour market, with Australians less likely to use AI primarily for automation,' he said.
Economic Factors Behind the Slowdown
Despite AI's limited impact, the report warns that the job market is softening due to three interest rate hikes and the economic repercussions of the Middle East conflict. Annual employment growth slowed to 0.9 per cent in the year to April 2026, down from an average of 1.9 per cent over the previous three years. Unemployment has risen by 0.4 percentage points since December 2025.
'With economic uncertainty rising, businesses are expected to behave more cautiously, tempering hiring decisions and constraining employment growth over the coming year,' Mr Rumbens said. He also noted that government budget constraints are leading to a slowdown in public sector jobs growth, particularly in health care, education, and public administration.
Hiring Slows in AI-Disrupted Sectors
While AI has not caused mass layoffs, it is affecting hiring rates. Sarah Rogers, Deloitte's workforce strategy lead partner, acknowledged that AI is slowing the number of new hires in disrupted sectors. She explained that AI-disrupted occupations are forecast to grow at an annual average of 1.2 per cent over the next five years, down from 1.9 per cent in the previous five years.
'These AI-disrupted occupations are concentrated in white-collar, knowledge-intensive industries such as financial and insurance services, professional, scientific and technical services, and information media,' Ms Rogers said. However, she emphasized that the tasks within these roles that are disrupted often rely less on judgment, empathy, and people skills.
Global and Local Tech Layoffs
The Deloitte research comes amid a wave of job cuts at major technology companies globally. Microsoft has offered voluntary buyouts to 7 per cent of its US staff, while Meta plans to cut about 10 per cent of its workforce. In Australia, companies like Atlassian and WiseTech Global have undergone restructures, cutting 1,600 and 2,000 jobs respectively.
Despite these cuts, the report concludes that the broader economic environment, rather than AI, is the primary driver of the current job market challenges. As the economy slows, businesses are becoming more cautious, and hiring is expected to remain subdued in the coming year.
