How legislative changes are reshaping recruitment in Australia

Current labour market conditions in Australia present significant challenges for recruitment across various sectors. With 38 per cent of employers facing hiring difficulties, skills shortages are a common hurdle in securing suitable candidates. Sectors such as health and education feel the strain particularly, as they demand specialised skills that are often in short supply.

Adding to the challenge, rising wage expectations, fuelled by the recent increase to the national minimum wage made by the Fair Work Commission (FWC) and broader economic pressures, are stretching recruitment budgets. Employers, particularly smaller businesses, are having to reassess their strategies to remain competitive in attracting and retaining talent.

So, what are the impacts of these harsh conditions on businesses?

The challenges outlined in the June 2025 AHRI Quarterly Australian Work Outlook are creating significant operational and strategic hurdles for businesses.

Rising wages, including the minimum wage rise, are adding further pressure and prompting businesses to reassess their budgets and overall payroll expenditure. With wage expectations rising, companies must strike a balance between competitive pay packages and maintaining profitability.

While current recruitment challenges are primarily driven by skill shortages and intensifying competition for talent, some sectors are struggling to fill open roles, forcing them to spend more time and resources on attracting qualified candidates. Smaller businesses face the risk of being crowded out by larger organisations with the capacity to offer more lucrative benefits and salaries to find employees.

Legislative changes, including the newly enacted Right to Disconnect and stricter rules on casual and fixed-term employment, present both opportunities and challenges. While these laws are fostering better productivity and engagement, they also require businesses to overhaul internal policies and workflows, adding complexity to workforce planning. The regulatory uncertainty, especially within labour hire legislation, is only increasing the compliance burden on organisations already struggling with adapting recruitment processes in the current Australian labour market.

Together, these challenges demand more flexible and innovative hiring and recruiting strategies, proactive legislative compliance practices, and a sharper focus on operational efficiency.

Increasing levels of compliance are also a key factor in the current job market

Legislative complexity and changes have also shaped the recruitment landscape and employee hiring strategy in recent years. Stricter regulations surrounding fixed-term contracts and casual employment mean businesses must plan their workforce arrangements while remaining compliant. Although these changes have brought positive impacts, such as improved engagement and productivity, they’ve also added intricacy to hiring processes.

Employers are responding by adopting innovative strategies to break down these barriers to recruitment, such as offering greater flexibility or tapping into underutilised talent pools to find staff. With reduced migration further tightening the available labour supply, organisations are finding they need to be agile and proactive to overcome what is undoubtedly a challenging recruitment environment and Australian job market.

Find the right balance with the support of industry-leading HR experts

Despite growth in the labour market, recruitment challenges and skill shortages remain significant hurdles. Legislative changes are reshaping workplaces, leading to improvements in productivity and satisfaction, although some resistance is evident.

Employers are focused on balancing staff retention, compliance with new regulations, and managing escalating wage expectations, and this is where Citation HR can help. With over three decades of experience navigating Australia’s workplace law landscape, our industry experts can provide tailored guidance and advice to help your business achieve long-term success.

If any of this information has raised questions for your business about employee hiring strategy, or you’ve got another workplace matter you need assistance with, please reach out to our friendly team with our 24/7 HR Advice Line.

Not a Citation HR client? Why not test out our advice? Arrange your complimentary workplace compliance consultation.

About our author

Lauren Stariha is a Senior Copywriter and Content Specialist at Citation Group. She’s responsible for creating engaging and meaningful content across various brands, from eBooks and email campaigns to blogs and multiple social media channels.