Europe's debt crisis is worrying Australian employers and keeping them from hiring staff, economists say.
They warn many local jobs could be lost this year, should Europe's debt problems worsen.
Official employment figures, due on Thursday, are expected to show that 5,000 jobs were added in December, with the unemployment rate steady at 5.3 per cent, according to the median of 13 economists surveyed by AAP.
The participation rate is expected to stay at 65.5 per cent.
National Australia Bank senior economist Spiros Papadopoulos said the constant flow of negative headlines from Europe had made firms cautious in their employment plans.
"Quite clearly employers are scaling back their hiring and that's being reflected in weaker jobs growth and also the slightly higher unemployment rate that we've seen over the past few months," Mr Papadopoulos said.
He said the outlook for the jobs sector in 2012 was largely hinging on how world economies navigated through their economic problems.
"It can really go either way.
"If things get worse in Europe, if China slows more than expected, if the US has a weaker year than what most people are expecting ... Australian firms will continue to wind back hiring intentions and will probably start to lay off employees."
JP Morgan's Ben Jarman said he expected the unemployment rate to creep up steadily this year.
"Given just how uncertain the outlook is for global growth, because of what's happening in Europe (and) China slowing ... it is hard for firms to launch any major infrastructure work," Mr Jarman said.
He said weakness in the employment sector may prompt the Reserve Bank of Australia (RBA) to cut interest rates further.
The RBA reduced the cash rate by 25 basis points in November and again by the same amount in December last year.
Mr Jarman expects more rate cuts in February and March.
HSBC chief economist Paul Bloxham said he expected 2012 to be a solid year for the labour market due to strong investment in the mining sector.
But for now the labour market was experiencing a mild downturn, he said.
"We think this reflects that business confidence is fairly weak, and hiring intentions have weakened on the back of the global scenario that is playing out.
"The global economy is in a slowdown at the moment, and that slowdown is having an impact on some parts of the Australian economy, and that's what's seen the labour market ease."
