Industries with the Highest Labor Costs in Australia in 2026

• 1. State Government Administration in Australia

  Labor Costs for 2026: $178.4B

  The State Government Administration industry comprises the eight state and territory governments across Australia. Under the Australian Constitution, these governments are responsible for all functions not expressly assigned to the Commonwealth, including public education, hospitals, transport infrastructure, law enforcement and local planning. This industry captures the central administrative and service delivery roles of each jurisdiction and overlaps with other industry classifications lik...

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• 2. Health Services in Australia

  Labor Costs for 2026: $121.1B

  The Health Services subdivision encompasses various health facilities and services. General hospitals generate more than half Australia's health services revenue. Other key revenue sources include general practitioners (GPs), clinical specialists and dentists. While demand for health services has surged in response to Australia’s ageing population, the pandemic created mixed demand within healthcare industries. Pathology services experienced strong revenue growth during 2020-21, whereas psych...

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• 3. Charities and Not-for-Profit Organisations in Australia

  Labor Costs for 2026: $108.5B

  Amid a shifting economic landscape, Australian charities and NFPs have experienced a drop in individual donor contributions, largely due to inflationary and housing cost pressures. Yet the sector demonstrates resilience through larger individual contributors, corporate sponsorships and government support, enabling many organisations to sustain their primary services despite constrained household budgets. Growing wealth inequality has spurred this dynamic as wealth is concentrated in instituti...

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• 4. Professional Services in Australia

  Labor Costs for 2026: $96.7B

  The Professional Services subdivision's performance is largely linked to overall economic conditions, often determining business confidence and capital expenditure. Over the past few years, greater business profit and rising capital expenditure by the public sector have supported subdivision demand. However, construction projects that were delayed or cancelled because of surging construction expenses and labour scarcity adversely impacted several industries, including architectural services a...

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• 5. Public General Hospitals in Australia

  Labor Costs for 2026: $64.2B

  Substantial government funding has partly supported growth in the Public General Hospitals industry. The federal and state governments are the primary source of funding for public hospitals, with private health insurance and other non-public revenue sources expected to account for less than 10.0% of industry funding in 2024-25. Public hospital services funding under the National Health Reform Agreement (NHRA) is expected to reach $30.1 billion in 2024-25, steadily rising over the past decade....

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• 6. Community Services in Australia

  Labor Costs for 2026: $61.3B

  Organisations in the Community Services subdivision play an integral role in Australia's wider care and support economy. Subdivision operators help to arrange paid and unpaid care and counsel for individuals in need, including the economically disadvantaged and other vulnerable members of society like children and the elderly. Favourable demographic trends and ongoing government funding - especially funding associated with the staged aged care reforms, the 2023 Cheaper Child Care policy and t...

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• 7. Finance in Australia

  Labor Costs for 2026: $46.5B

  The Finance sector's operating environment was previously characterised by record-low interest rates. Nonetheless, high inflation prompted the Reserve Bank of Australia (RBA) to hike the cash rate from May 2022 onwards. This shift allowed financial institutions to impose higher loan charges, propelling their revenue. Banks raised interest rates quicker than funding costs in the first half of 2022-23, boosting net interest margins. However, sophisticated competition and digital disruption have...

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• 8. Franchising in Australia

  Labor Costs for 2026: $40.2B

  The Franchising industry has weathered a turbulent period. Pandemic restrictions led to significant disruptions for franchised businesses. Sectors like hospitality, travel and food services bore the brunt of these changes, grappling with density quotas and border restrictions. In the aftermath, franchised companies have struggled to regain footing, especially against consecutive interest rate hikes, which have stymied consumer spending and left businesses battling elevated cost pressures. Rev...

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• 9. Government Schools in Australia

  Labor Costs for 2026: $39.8B

  While current revenue figures have seen continued growth for the five years through 2024-25, inflation has meant that it has materially declined over the same period. Currently, revenue for the Government Schools industry sits at an estimated $70.5 billion, reflecting an annualised contraction of 1.2% since 2019-20 and a 2.5% drop compared to 2023-24 figures. As the Australian population aged between 5 and 18 grows, demand for public schools continues to swell. Government schools are mainly f...

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• 10. National and Regional Commercial Banks in Australia

  Labor Costs for 2026: $36.5B

  Banks are grappling with a transition from years of loose monetary policy to tighter financial conditions. Soaring inflation prompted an RBA pivot in the face of surging energy, housing and food prices. The RBA hiked the cash rate multiple times from May 2022 to November 2023. Prior to this, banks cashed in on high residential housing prices, with low interest rates and government schemes encouraging strong mortgage uptake over the course of the pandemic. APRA also eased the interest rate buf...

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