Australian SMEs keep hiring despite tougher conditions

Hiring among Australian small and medium-sized businesses rose 6.8% year on year, according to Employment Hero's February Jobs Report. The data covered more than 350,000 businesses and 1.5 million employees.

The figures suggest smaller employers are continuing to recruit despite higher interest rates and weaker consumer sentiment. Casual hiring rose 9.4% year on year, more than twice the pace of full-time roles, which increased 4.2%.

That gap suggests employers are relying more on flexible staffing as they manage uncertain trading conditions. Casual workers often cost more because of penalty rates and leave loading, but the data indicates many businesses are willing to make that trade-off.

"Australian SMEs are resilient," said Ben Thompson, Chief Executive Officer and Co-Founder of Employment Hero. "Rather than retreating, they're adapting. Businesses are continuing to show preference for casual workers despite the fact that casual workers tend to be more expensive due to holiday and weekend rates. Flexibility is a top priority for business owners, and they're building it into their workforce planning."

AI hiring

The report also highlighted a shift in how employers describe skills in job advertisements. Growth in AI jobs has increased 13-fold since the fourth quarter of 2024, with Machine Learning Engineer the most in-demand AI role.

Most mentions of AI, however, appeared outside specialist technology positions. In the first quarter of 2026, only 25% of job listings that mentioned AI in the description also included AI in the job title. The remaining 75% related to roles such as customer service, marketing, healthcare and accounting.

The pattern suggests employers are looking for workers who can use AI tools in day-to-day roles, rather than recruiting only technical specialists. Generative AI was the most common term used in these listings.

"We're watching AI literacy become the new digital literacy. A decade ago, every job required basic computer skills. Now we're seeing the same shift with AI. This is honestly great news for job seekers, particularly those with non-technical backgrounds. Employers aren't insisting on technical qualifications. They're just looking for people who've upskilled with AI and will provide leverage to their business," Thompson said.

Sector winners

Construction and trades recorded some of the strongest gains in the dataset. Employment in the sector rose 9.5% year on year, while wages increased 3.0% month on month, the largest monthly rise among the industries tracked.

Administrative and office support roles rose 16.2% year on year, and engineering positions increased 14.3%. Agriculture, mining and energy also posted strong growth, with employment up 11.9% and pay up 6.3% year on year.

Those increases come as major infrastructure projects continue to lift demand for skilled labour and project support. The concentration of growth in construction, engineering and resources-related fields points to sustained pressure in parts of the labour market that rely on specialist workers.

"Multi-billion dollar infrastructure projects are creating fierce competition for skilled workers, and that's flowing straight through to pay packets," said Thompson. "Tradies are in the box seat right now."

Wage growth

Across the wider workforce, average wages rose 5.4% year on year and 0.1% month on month, according to the report. That means pay growth is running ahead of inflation, although the pace has eased slightly from the same period a year earlier.

Several occupational groups posted stronger gains than the average. Government and defence roles recorded wage growth of 8.1% year on year, followed by call centre and customer service jobs at 7.9% and real estate at 7.2%.

Other parts of the labour market were more subdued. Education roles saw wage growth of 1.7% year on year, while administration recorded a 2.0% increase.

The report adds to a mixed picture for the Australian economy, where broader indicators point to weaker confidence even as some parts of the jobs market remain firm. For smaller businesses, the numbers suggest employers are still recruiting, but selectively, with greater emphasis on flexibility, digital tools and sectors tied to infrastructure and operational demand.

"If anyone still doubts the backbone of the Australian economy, look at the data. SMEs aren't waiting for perfect conditions; they're hiring, increasing wages, and getting on with it," Thompson said.