CEO Outlook for 2025

As we step into 2025, the employment services sector is bracing for another year of transformation. Each year, our Founder and Director, Paul Diviny, speaks with some of Australia’s leading employment service CEOs to gather insights on the challenges, opportunities, and policy shifts shaping the sector. This year’s outlook is particularly significant with the rollout of the New Specialist Disability Employment Program (NSDEP), a license review for Workforce Australia providers and the looming federal election creating a dynamic and uncertain landscape.

Reflections on 2024: a year of adaptation and resilience

The past year saw employment service providers navigating ambiguity, with major contract tenders, economic shifts, and evolving participant needs defining their experiences. For many, the successful completion of NSDEP bids was a milestone, demonstrating the sector’s ability to showcase its value proposition and specialist expertise. 

However, some providers admitted that they left aspects of their tenders too late or struggled with technology limitations, causing last-minute disruptions. According to one CEO: “Writing our own tender had a few issues – the technology solutions didn’t work as planned and that left us a little short of capacity, causing a mad rush at the end”.

A key focus in 2024 was workforce retention. CEOs acknowledged that investing in staff recognition, professional development, and structured retention strategies helped stabilise their teams. At Prospert, we’ve been pleased to see more providers engaging in learning and development to build employer and community engagement skills which, in turn, is known to improve retention.

Policy and politics: what the federal election means for the sector

With a federal election expected very soon, employment services providers are preparing for potential policy shifts. While the NSDEP rollout from 1 July will likely proceed as planned, a new government – especially if led by the Coalition – could signal changes in Workforce Australia services. “For example, we could see a potential return of Jobs Pathways under Employability Skills Training (EST) program,” commented one leading CEO.

All 176 Workforce Australia provider licenses expire on 30 June 2025 and the department will consider performance and other factors before granting extensions. One CEO expressed concerns regarding the license review commenting that “even after three years we continue to face challenges in engaging long-term unemployed participants, particularly people with complex barriers to work”.

The New Remote Employment Service (nRES) also remains a focus, with predictions of a provider shakeout as the funding model takes effect. Meanwhile, tightening NDIS spending could have flow-on effects for people with disability, particularly in terms of employment participation. Workforce Australia providers are also anticipating possible adjustments to activation requirements and mutual obligation settings as political debates around job seeker compliance continue.

CEOs are not expecting any Federal Budget announcements to impact the sector in 2025.

Economic trends: navigating rising long-term unemployment

Global economic conditions are shifting, and while Australia has remained relatively stable, long-term unemployment is expected to rise. According to ACOSS: “We now have 60% of people relying on unemployment payments for more than a year, which is up from 51% over a decade ago”. However, CEOs shared optimism that disability unemployment rates will narrow, particularly with the NSDEP’s focus, but many remain cautious.

A key concern is the mismatch between employer needs and job seeker availability. While industries like advanced manufacturing, renewable energy, and aged care are experiencing shortages, retraining pathways remain inadequate. There is an increasing focus on reskilling mid-career workers to meet emerging labour market needs.

Technology and innovation: the AI conversation gets real

Over the past year, discussions around AI and automation in employment services have shifted from theoretical to practical. Some providers have started using AI-driven tendering tools, while others are exploring AI-assisted frontline record keeping to support case managers. Providers are increasingly exploring digital tools to enhance service delivery, including the use of AI for administrative efficiencies and tailored job-matching solutions.

However, frustrations remain around government technology platforms, with employment service providers forced to pause job seeker compliance due to ongoing technical glitches. Providers are concerned that new technology for NSDEP may experience similar challenges.

The competitive landscape: fewer, but stronger providers?

CEOs expect the employment services provider landscape to consolidate further in 2025. NSDEP and Workforce Australia contracts will likely favour scale and specialisation, leading to fewer but more robust providers. While new entrants will emerge, smaller providers may struggle to remain viable.

A similar trend is anticipated in nRES contracts, with some existing providers opting out while others double down on securing their place in the market. The days of large-scale, generalist providers dominating the sector may be shifting towards a model where highly specialised, community-driven approaches thrive.

What’s next? a 12-month outlook

Key areas of focus for 2025 include:

• Winning NSDEP contracts and retaining a strong foothold in disability employment services

• Securing license extensions for Workforce Australia and focusing on continued participant engagement

• Supporting participants through any transitions required as part of the NSDEP contracts or Workforce Australia business reallocation

• Preparing nRES grants (opening in May 2025) and ensuring service continuity for participants

• Driving employer engagement strategies to create sustainable job opportunities for the long term unemployed

• Creating more meaningful participant engagement, in part through enhancing digital capabilities to improve service delivery and operational efficiency.

Conclusion: a year of change and opportunity

2025 is shaping up to be a pivotal year for employment services in Australia. With NSDEP and nRES rollouts, potential changes to Workforce Australia, a possible change in government, and shifting economic conditions, providers will need to be agile, innovative, and deeply connected to their participants, employers and their local communities.

Prospert will continue to support the sector through these changes, helping providers navigate uncertainty, leverage new opportunities, and drive sustainable employment outcomes. If you’d like to discuss these insights further, get in touch with us today.