7 in 10 employers excluding candidates despite persistent tight labour market
- New research from the Australian HR Institute reveals Australia’s labour market is entering a more cautious phase, with hiring intentions falling to their lowest level since 2023 and redundancy intentions also seeing a sharp fall
- The research also suggests that nearly 7 in 10 employers are excluding candidates with a range of personal attributes during recruitment, including illness, mental illness, disability and age.
- These findings raise questions about labour supply in the short and medium-term, with Australia set to add nearly a million jobs over the next five years and the share of Australians beyond retirement age gradually increasing in the coming years
Nearly 7 in 10 Australian employers are excluding candidates with certain personal attributes during recruitment, according to new research from the Australian HR Institute (AHRI). The findings raise questions about workforce participation as Australia confronts the economic consequences of an ageing population.
These findings come as Australia’s still-tight labour market begins to ease from previous conditions. AHRI’s March Quarter 2026 Australian Work Outlook, based on a survey of 612 senior HR and business decision-makers, shows net employment growth expectations have fallen to +38, down from +48 in the previous two quarters.
Recruitment intentions have also dropped sharply, with 59 per cent of organisations planning to hire in the upcoming quarter, down from 71 per cent in December 2025, marking the lowest level since the survey began.
At the same time, 69 per cent of employers say they have excluded candidates with certain personal attributes during recruitment, including people with a history of mental illness (32 per cent), long-term illness (28 per cent), disability (19 per cent) and workers aged 55 and over (19 per cent).
AHRI Chief Executive, Sarah McCann-Bartlett, said the findings highlight the importance of ensuring recruitment practices allow employers to draw from the broadest possible pool of talent.
“Widespread reluctance to recruit people with certain characteristics highlights the challenge Australia faces if we want to maintain strong workforce participation. In a country where workforce participation is expected to become more constrained as the population ages and labour demand increases, narrowing the available talent pool carries clear economic risks,” she said.
“AHRI advocates for a jobs market where all candidates are fairly considered. Broadening opportunity ultimately strengthens organisations, improves social equity and supports stronger economic performance for Australia’s future.”
Despite a cooling in hiring sentiment in the first quarter, the labour market remains tight by historical standards. Redundancy intentions eased to 19 per cent, while recruitment difficulty fell to its lowest level since 2023.
Employers expect average pay increases of 3.3 per cent over the next 12 months, slightly higher than the previous quarter. However, with headline inflation forecast to reach around 4.2 per cent mid-year, workers are likely to experience another period of falling real wages leading to cost-of-living pressure.
Ms McCann-Bartlett adds:
“Following a recent period of rising real wages, employee satisfaction and engagement may become a challenge as cost-of-living pressures mount again for employees.”
“The survey data highlights the scale of the challenge in helping more economically inactive people/people from under-utilised groups enter and remain in work,” she said.
“Addressing this will require renewed efforts to strengthen employability and remove barriers to recruitment, including older Australians and people with disability.”
The research also highlights continued investment in workforce capability, with Australian employers spending an estimated $13.76 billion on training in 2025, or about $1,122 per employee, while 60 per cent of organisations plan to increase skills investment over the next year.
