Australia’s highest-ever wage growth a good sign for candidates

Great news for candidates, as the wage growth in Australia for the September quarter was the highest in recorded history. What trends are affecting this?

The September quarter saw the wage price index (WPI) rise 1.3 per cent. According to the Australian Bureau of Statistics (ABS), this is the highest quarterly growth increase in the 26 years of reporting history.

“A combination of factors led to widespread increases in average hourly wages this quarter,” said ABS head of price statistics Michelle Marquardt.

“In the private sector, higher growth was mainly driven by the Fair Work Commission’s annual wage review decision, the application of the Aged Care Work Value case, labour market pressure, and CPI [consumer price index] rises being factored into wage and salary review decisions.”

She continued: “The public sector was affected by the removal of state wage caps and new enterprise agreements coming into effect following the finalisation of various bargaining rounds.”

Meanwhile, the yearly growth between September 2022 climbed 4 per cent. This is reportedly the highest yearly growth since 2009.

“Many public sector jobs were affected by the ending of state wage caps and the resolution of wage negotiations. This resulted in initial or backdated increases being paid for jobs covered by the newly approved enterprise agreements.” Ms Marquardt said.

“In original terms, across all public and private sector jobs that had a wage movement in the September quarter, the average change was a 5.4 per cent increase, up from 4.0 per cent in September quarter 2022. The growth was mostly driven by increases to wages in the private sector. Almost half (49 per cent) of all private sector jobs recorded a movement, with the average increase being around 5.8 per cent. This compared to the public sector where 34 per cent of jobs recorded an average pay rise of 3.3 per cent.”

People are clearly taking advantage of the lucrative job market, as employment climbed and recruitment slowed in October. The unemployment rate also remained steady at 3.7 per cent.

ASPL’s chief executive, Kris Grant, commented on the results: “With annual employment growth still around 3 per cent, the economy is still creating jobs and the unemployment rate remains very low, giving a still tight labour market. We are still seeing persistent skills shortages in some areas, such as in the IT industry and among the trades such as mechanics and metal workers.”

“However, we have seen a slowdown in recruitment activity, which points to a slowdown in jobs growth in 2024 … Recruitment activity declined in four states and territories over the month, with Victoria notably recording the strongest decrease (down by 7.1 per cent or 4,900). So, while the unemployment rate could stay below 4 per cent in the early months of 2024, eventually, we expect the Australian economy to slow as a result of higher interest rates and with that, employment growth is likely to slow too, which is expected to push the unemployment rate above 4 per cent in 2024.”