Wicketkeeper-batsman Mohammad Rizwan — who is the only batsman to have crossed the 1,000-run mark in T20Is in a calendar year — has climbed to the third spot with a career-best rating of 798.
After heavy defeats in Brisbane and Adelaide, the visitors must win in Melbourne to keep the five-Test series alive, with Australia only needing a draw to retain the urn as holders.
Labuschagne, the ninth Australian man to cross the 900-point mark in the ICC's Test batting rankings, is ahead of Root, with Australia's Steve Smith third, New Zealand captain Kane Williamson fourth and India's Rohit Sharma fifth in the latest standings published on Wednesday.
It was a remarkable comeback by an inexperienced South African team, who were outplayed in the first Test in Centurion but came back strongly to win the next two matches despite losing the toss and having to bat last in all three matches.
"He especially had a year to remember in Tests and T20Is, reaching his peak during the ICC Men's T20 World Cup in UAE where he impressed one and all with his sheer speed and skills," the ICC said in a statement.
Fast bowler Shaheen Afridi was named men's cricketer of the year, while his teammates Babar Azam and Mohammad Rizwan were declared the ODI and T20I cricketers of year respectively. Fatima Sana won the emerging women's cricketer of the year award.