We show that Australian labour markets became more flexible after 1980, but most gains occurred before 1993. We find large and significant procyclical effects in the transition probabilities from unemployment to jobs, which contribute significantly to the variations of unemployment. Transitions from jobs to unemployment are countercyclical, but the effects are small and insignificant. Job-losing and job-finding are both important for the evolution of unemployment over the whole business cycle, but during recessions, job-finding is a bigger issue. For women, part-time transitions are more important.