Artificial intelligence is not wiping out Australian jobs, but it is quietly reshaping the country's labor market, according to fresh research from Deloitte Access Economics and the Department of Employment and Workplace Relations (DEWR). The picture that emerges is one of a 'jobs shift, not jobs wipeout' — with AI-exposed roles growing more slowly than previously expected, even as overall employment holds steady.
What the data shows
Deloitte Access Economics, a leading economic research firm, found no clear break in overall employment growth between AI-disrupted occupations and other roles since AI hit the mainstream in 2022. However, the firm projects that AI-exposed jobs will add about 167,200 fewer workers over the next five years than previously anticipated. That is a significant slowdown, but it is a deceleration, not a collapse.
DEWR added nuance to the picture. Its analysis found that jobs in AI-exposed categories are still growing, but at a noticeably slower pace than roles less affected by automation. The department's data suggests the labor market is adjusting gradually, with workers shifting into roles that complement AI rather than compete with it.
The inflation angle
Beyond the labor market, the reports highlight a less obvious risk: the massive investment in AI infrastructure — data centers, chips, energy grids — could push up inflation before any efficiency gains arrive. Building and powering AI systems requires huge upfront capital, which can drive up demand for materials, energy and skilled labor, putting upward pressure on prices.
This dynamic echoes what happened during earlier technology booms, where the construction phase of new infrastructure often stoked inflation before productivity improvements brought costs down. For central banks like the Reserve Bank of Australia, that means AI could complicate the fight against inflation in the near term, even if it eventually helps lower costs.
What it means for investors
For everyday investors, the key takeaway is that AI's impact on the economy is unfolding in stages — and the first stage may be inflationary, not deflationary. Companies that supply AI infrastructure, such as data center operators, chipmakers and energy providers, could see a boost in demand and pricing power. Meanwhile, firms that rely heavily on AI-exposed labor may face higher costs or slower growth as they adapt.
The labor market shift also has implications for portfolio strategy. Sectors with high exposure to AI-disrupted roles — such as administrative services, customer support and some manufacturing — may see slower earnings growth. On the other hand, industries that benefit from AI adoption, like technology, healthcare and professional services, could outperform.
Investors should also watch for signs of AI-driven inflation in upcoming economic data. If AI infrastructure spending pushes up consumer prices, it could delay interest rate cuts, which would affect everything from bond yields to stock valuations. For context, recent US jobless claims showed a steady but cool labor market, a reminder that global trends can influence Australian markets.
Broader context
The Australian experience mirrors what is happening in other developed economies. In the United States, for example, AI-related job postings have surged, but overall employment remains robust. The difference is that Australia's smaller, more resource-dependent economy may feel the inflationary effects of AI infrastructure more acutely, especially if it drives up energy costs.
Meanwhile, global markets are already reacting to AI-related shifts. Latin American markets dipped recently as oil prices topped $85 and the US dollar strengthened, partly due to AI-driven demand for energy. And Gulf stocks slid on shipping disruptions, highlighting how interconnected AI's infrastructure needs are with global supply chains.
The bottom line
AI is not the job-killer some feared, but it is a slow-motion reshuffling of Australia's workforce. For investors, the near-term risk is inflation from AI buildout, not deflation from automation. The long-term opportunity lies in companies that can harness AI to boost productivity without being disrupted themselves. As always, diversification and a focus on quality remain the best defenses against uncertainty.
