Government says 'strong and sustainable wage growth' will be delivered over medium term
Australia's wage growth logged its lowest quarter in two years, according to the latest data from the Australian Bureau of Statistics (ABS).
The Wage Price Index went up 0.7% in the December quarter of 2024, and 3.2% throughout the year.
"The 0.7% rise this quarter was the equal lowest growth since March quarter 2022," said Michelle Marquardt, ABS head of prices statistics, in a statement.
"At 3.2%, the annual increase in wages was down from 4.2% in December quarter 2023 and is the equal lowest since September quarter 2022."
According to the ABS, the private sector logged an annual 3.3% wage growth, the lowest since 2022. Quarterly, the wage growth was at 0.7%, also the lowest rise since the March 2022 quarter.
The public sector also logged a 2.8% annual wage growth, falling below three per cent for the first time since the June quarter of 2023.
Quarterly, wages in the public sector increased 0.6% in the December quarter, lower than the 1.4% rise in the same period in 2023.
"The public sector contributed a quarter of total wage growth, compared to 34% in the December quarter 2023," said Marquardt. "This drop in contribution was driven by the timing of some agreements shifting to outside the December quarter this year, other agreements have expired or have smaller increases compared to the same time in 2023."
Despite the lowest wage growth since 2022, the government and unions welcomed the growth in real wages.
Real wages grew by 0.5% in the quarter, while 0.8% through the year.
"Workers' pay packets in the last 12 months are finally getting ahead of prices and the result is real wages have gone up more in the last year than they did over the entire nine years that Peter Dutton was last in government," said Michele O'Neil, president of the Australian Council of Trade Unions, in a statement.
The government noted that real wages have now grown for five consecutive quarters.
"More Australians are working, earning more and keeping more of what they earn under Labour," it said in a statement. "While wage growth has moderated in today's data, it remains stronger than at any point during the former government."
It attributed the achievement to its policies that are driving "strong and sustainable" wage growth for workers.
"The government's clear and ambitious agenda to boost productivity growth through competition reforms, plans to modernise markets and investments in skills and human capital will help deliver strong and sustainable wage growth over the medium term," it said.
Meanwhile, the slower wage growth under the WPI comes as annual growth in total wages also slowed in December 2024 under the ABS' Monthly Employee Earnings Indicator.
"As an aggregate measure of total wages and salaries, the Monthly Employee Earnings Indicator captures all of the compositional changes in the labour market," said Bjorn Jarvis, ABS head of labour statistics, in a statement.
"This includes changes in employment, hours employees were paid for, pay rises, and periodic payments. It complements but is different to the measure of underlying wage growth reported in the Wage Price Index."
According to the ABS, total wages and salaries paid by employers reached $102.0 billion in December 2024, up 5.7% from the $96.4 billion in December 2023, according to separate data from the ABS.
However, this is still slower than the 7.3% annual growth in December 2023, Jarvis pointed out.
Quarterly, growth in total wages was also slower in the December 2024 quarter (1.3%) compared with the same period a year prior (1.6%).
Despite wage growth slowing, pay increase expectations throughout the year to January 2026 have increased, according to the latest data from the Australian HR Institute.
Its latest report found that the mean basic pay increase in organisations is expected to be three per cent in the 12 months to January 2026.
"This is up from the 2.7% previously expected for the 12 months to October 2025," the report read.
Source: AHRI
Only 11% of employers are also planning to freeze employees' pay, down from the 23% in the previous quarter, according to the report.
"More than a third (36%) of employers reported that they do not yet know the extent of wage changes in their organisation for the 12 months to January 2026; this is the highest figure recorded for this survey," the report read.
