Australia’s wage attitudes vary: dynamic interplay of economic forces, policy decisions, and labor market conditions. Therefore, from the employers’ and employees’ perspectives, March 2025 is about measuring current average hourly wages and imagining their evolution.
Current Average Hourly Wages in Australia
As of September 2024, it is observed that hourly wage rates in Australia, as determined by the Wage Price Index (WPI), reflect an annual rise of 3.5%. This was a decline from the previous quarter’s growth of 4.1% and the slowest wage growth since Q4 2022. Interestingly, 3.7% in wages were recorded in the public sector, outperforming private sector growth for the first time since late 2020.
Wage Growth by Classification
Wage dynamics are different in various sectors. The public sector annual wage growth as of September 2024 stands at 3.7%, outperforming the private sector for the first time since December 2020. The private sector, meanwhile, recorded a 3.5% annual wage growth in that same period. A few high-growth sectors, including electricity, gas, water, and waste services, reported a 5.0% rise in wages, followed by education and training at 4.4% and administrative and support services at 3.9%.
Wage Drivers
Many factors will cause variability in wage settings. Even late-2023 saw soaring wage growth of 4.2% annually due to a tight labor market. With slight moderation in early 2024, wage growth is expected to remain high for the subsequent years. Minimum wage increases brought about by Fair Work Commission, 5.2% in 2022 and 5.75% in 2023, are critical forces behind wage growth, especially for employees dependent on awards. Outside general labor shortages that crossed over sectors, retail, in particular, has now experienced wage growth despite mere slowing.
Expected Wage Trends
Increased moderation in wage growth will, however, set in. According to the RBA, wage growth is now expected to reduce to 3.4% by December 2024, easing to 3.1% by December 2026, as the conditions in the labor market weaken. Treasury sees wage growth at 3.25% by mid-2026; therefore, a gradual moderation in wages will occur.
Implications for Employers and Employees
It is through knowing of these wage dynamics that clarity arises. Businesses are to brace themselves for wage pressures to remain in the near future and consider appropriate approaches to managing those labor costs. Workers should be anticipating wage increases that remain firm but moderate and be compiling information around specific trends within their industries, thus allowing them to make more coherent decisions around career and financial planning.
Conclusion
Signs show that there is currently slowing wage growth in Australia after recent acceleration. Yet wages continue to sit above long-term averages, and growth prospects suggest a gradual decline in the years to come. It is therefore paramount for both employers and employees to remain aware of these trends in order to make strategic decisions on the fast-evolving backdrop.