Sydney has added nearly half a million jobs in the past decade but patterns of employment growth are putting the city's transport system under pressure and helping to drive up property prices.
A yawning employment gap between city and country has also been revealed by analysis of the latest census data by the consultancy SGS Economics and Planning.
This urban-rural jobs divide looms as a lasting economic challenge for the state.
The report reveals Sydney's inner suburbs have accounted for a disproportionate share of employment growth.
The proportion of the city's jobs in the "inner Sydney" statistical area, which includes the cental business district and its immediate surrounds, swelled from 20.6 per cent to 22.4 per cent between 2006 and 2016. That relatively small urban region alone added nearly 140,000 jobs in that period.
While the increasing concentration of employment in Sydney's key jobs hub has generated economic benefits, it is also placing strain on the transport network.
The report warned road and rail congestion "will only worsen in future" without better management of population and employment growth.
As more people choose to live close to high quality employment opportunities, demand for housing in inner city locations increases placing pressure on property prices and housing affordability.
"Policy needs to respond to these challenges, such as through improving public transport capacity and infrastructure, or through increasing housing supply in inner areas," the report said.
It also drew attention to a growing employment divide between city and country.
While Sydney added 342,000 jobs between 2011 and 2016 the census figures showed employment in the remainder of NSW fell by 17,000 in that period.
The report's author, economist Terry Rawnsley, said the economic gulf between Sydney and other parts of NSW was a growing policy problem.
"The challenge for NSW is to connect the vibrant Sydney economy with the state's regional centres so you can help spread jobs growth," he said.
High-speed intercity public transport would help.
"If you could move people more quickly from places like Wollongong, Newcastle and Gosford into Sydney that would give people more access to jobs," Mr Rawnsley said.
Nationally, the census showed over 900,000 jobs were created in five state capitals - Sydney, Melbourne, Brisbane, Adelaide and Perth - between 2011 and 2016. But the rest of Australia saw a net increase of only 5400 jobs in that period.
"These numbers just reinforce the weakness in the jobs market across many regional areas, while the big cities, in particular Sydney and Melbourne, are booming," Mr Rawnsley said.
Total employment in Greater Sydney reached 2.2 million by 2016.
The construction industry contributed the biggest share of Greater Sydney's employment growth 2011 and 2016 (20 per cent) closely follow by health care and social assistance (up 19 per cent). Growth in knowledge industries jobs, especially professionals and financial services workers, was also robust especially in and around the CBD.
In regional NSW solid employment growth in the heath and social assistance (+15,820), construction (+6963) and education (+4525) between 2011 and 2016 was more than offset by big falls in manufacturing (-29,892), wholesaling (11,097), and retail trade (14,671).
When The Herald sought the state government's response to the gloomy census employment figures in regional NSW a spokeswoman for the Treasurer, Dominic Perrottet, cited alternative jobs data from the Bureau of Statistics' labour force survey which shows "more than 90,000 jobs" were added in the state's regional areas between September 2011 and September this year.
"Regional NSW is a jobs powerhouse," the spokesperson said.
But in a sign of concern about the economic performance in regional areas, the NSW Legislative Council's Standing Committee on Sate Development recently launched an inquiry into how Sydney's economic success can contribute more to the regions.
A Labor member of the committee, John Graham, said the new census employment figures tell the economic story behind big swings against the government in a series of recent by-elections in regional NSW.
"Voters outside of a growing, global Sydney feel like they are being left behind," he said.
The strongest employment growth in regional areas was in the health and education sectors where many jobs require a relatively high level of educational attainment.
The biggest losses were in manufacturing, wholesale trade and retail trade where required skill levels are often lower.
Nationally, almost a quarter of new jobs added between 2011 and 2016 were in health care and social assistance assistance (153,900) making it the strongest contributor to employment growth across Australia in that period, including in most capital cities.
The effects of population ageing were evident with more than 30,000 new jobs coming in residential care which includes nursing homes. There was also strong employment growth in the education and training sector.
