There are still more than four unemployed people competing for every vacant job in Australia, even as coronavirus payments are stripped away.
Australians on welfare will notice a drop in support as coronavirus supplements worth $150 a fortnight are removed on Thursday.
The government has replaced the top-up welfare payments with a permanent increase of $50 a fortnight.
The changes will affect more than 1.9 million working-age people on welfare, including 1.1 million on JobSeeker unemployment benefits.
More than 343,000 single parents (mostly women) will be worse off, along with 330,000 people on Youth Allowance and 80,000 receiving study support or widow payments.
Social Services Minister Anne Ruston said the supplements were a temporary, emergency response introduced when the labour market "effectively closed overnight" during the pandemic.
"Jobs are returning and the number of unemployed persons for every job vacancy has since fallen below pre-lockdown levels to 4.2 unemployed persons per vacancy," she said in a statement.
Cassandra Goldie from the Australian Council of Social Service said the permanent increase was not enough.
Dr Goldie warned three million people - including one million children - would be plunged further into poverty without an adequate increase to JobSeeker payments.
"Today that payment goes back to just $44 per day and it is clearly not enough to cover housing costs, to cover your food," she said.
"You're going to hear the stories over and over, every day, about parents who are pretending to their children they have eaten when they haven't."
Dr Goldie wants JobSeeker increased to at least $65 a day so that millions of people without paid work or enough hours are at least living above the poverty line.
Up to 150,000 more workers are expected to join the dole queue following the demise of JobKeeper wage subsidies.
Their weekly income will drop from $500 to just $314 if they move onto JobSeeker payments.
Labor is concerned unemployed people face a bleak jobs market.
"There are simply not enough jobs for every Australian looking for one, and coupled with the end of JobKeeper there is no clear jobs plan from the government," Labor senator Jenny McAllister told AAP.
But the Australian Bureau of Statistics has uncovered some positive news on business hiring demands.
Job vacancies increased by 14 per cent between November 2020 and February 2021, ending up 27 per cent higher than a year earlier, just before the start of the pandemic.
There were 289,000 job vacancies in February - 61,000 more than at the same time the previous year.
The biggest increases in job vacancies over the year were in accommodation and food services, construction and other services industries.
Businesses experiencing labour shortages told the bureau of difficulty filling vacancies for lower paid jobs.
Australian Associated Press