Economic uncertainty drives ‘job hugging’ phenomenon

Both employers and employees have to move with the times.

According to new people2people research, a shift is occurring in the Australian workplace. A “decisive reset” is being driven by altered hiring structures due to economic uncertainty and surging demand for AI, which has made employees more willing to compromise for the sake of job security.

Market activity and workforce data suggest hiring will focus more on AI, risk, revenue, and transformation roles, with AI competence almost universally a baseline skill. As reported recently, skills in data analytics, generative AI, machine learning, digital ethics and automation design are overtaking traditional entry-level skills, especially in administrative and operational roles.

Overall, the jobs set to surge in 2026 include AI engineer, chief risk officer, mechanical engineer, director of AI, and organisation development manager.

On the other hand, skills such as transaction processing, technical support, content editing, and vendor management are increasingly obsolete. While this suggests a shift rather than a replacement, some are conscious of a potential slippery slope that would further impact job security, perhaps in more significant ways.

AI anxiety has increased as adoption becomes more widespread. Regarding its impact on their job, almost four in 10 Australian workers express concern. This jumps to 50 per cent for younger workers (Millennials and Gen Z), with Gen X polling at 29 per cent and Baby Boomers at 34 per cent. However, one in five Baby Boomers reported not knowing how to use said AI.

Regarding job mobility, the Australian Bureau of Statistics showed a fall from 9.6 per cent in early 2024 to 7.7 per cent in February 2025, looking back at the past year. Worker priorities are moving with the economically unstable times, and increasing numbers are choosing to stay where they are, even when conditions aren’t ideal.

Three in five Australian workers are reportedly unlikely to apply for a new role due to global economic concerns – and, generationally speaking, this number rises to around half for Millennials and Gen Z employees.

A recent poll by people2people regarding financial security showed that almost 45 per cent of workers believe a pay rise would achieve this, with a side income polling at 24 per cent, job stability at 22 per cent, and work flexibility at only 8 per cent.

This isn’t to say the desire for hybrid work has been abandoned completely. While it has fallen as a main driver of financial security, it remains a consideration for both hiring decisions and employee retention. Only 30 per cent of polled workers would return to the office full-time, 32 per cent would quit, 26 per cent would request a pay rise, and 10 per cent would unhappily stay.

Clearly, if there’s one thing employees are not willing to forsake completely, it’s hybrid working, an elegant compromise for many employers and employees. The combined findings reveal that people are holding onto their positions and their money tighter than ever, but those who are willing to embrace AI as an opportunity rather than a concern are perhaps in better stead for the future.

From an employer perspective, Suhini Wijayasinghe, head of HR solutions for people2people, purported that “the organisations that win in 2026 will be those that balance caution with clarity – investing in future-ready skills, offering realistic flexibility, and being transparent about career pathways in an uncertain market”.