Australia's annual wage growth hits record levels

Hourly wage rates across Australia rose to 3.3% annually in 2022, according to the latest data from the Australian Bureau of Statistics (ABS).

The seasonally adjusted Wage Price Index rose 0.8% in the December quarter of 2022, slower than the 1.1% increase in the September quarter, but the highest reported increase in any December quarter in the past decade.

"This follows on from the September and June 2022 quarters, which were also higher than their comparable quarters back to 2012," said Michelle Marquardt, ABS head of prices statistics. "In combination, these quarterly increases have resulted in the highest annual growth in hourly wages since December quarter 2012."

The private sector recorded a 3.6% annual wage growth, following an increase of 0.8% in December. The public sector, on the other hand, lagged at 2.5% annual wage growth following a 0.7% quarterly increase.

By industry, the accommodation and food services registered the highest quarterly wage growth with 1.7%, while the wholesale trade industry recorded the highest annual wage growth with 4.2%.

The government said it welcomes the figures, attributing the increase to the country's economic plan.

"We're pleased that it's already starting to work, but we know that we need to see inflation moderate to secure real wages growth," Treasurer Jim Chalmers said in a statement.

Chalmers added that the government will continue delivering decent wages to workers, while shooting down claims of a wage-price spiral in the economy.

"Wages growth isn't the problem when it comes to inflation, it's part of the solution to cost-of-living pressures," Chalmers said. "We don't have an inflation challenge in our economy because wages are too high, but because of a war in Ukraine, pressure on global supply chains, and other challenges in our own economy ignored for too long."

What are employers saying?

The Australian Chamber of Commerce and Industry (ACCI) also welcomed the wage growth data, adding that the annual private sector labour cost growth has increased to levels not seen since the 2007 mining boom.

"While wage outcomes in the December quarter did not match that of the September quarter, growth was still strong. There is no sign that robust wages growth is easing anytime soon," ACCI chief executive Andrew McKellar said in a statement.

McKellar, however, called on the government to "reduce inflationary pressures and supply chain constraints" as employers will likely see more wage pressures this year.

"Employers continue to see significant pressure on wages and can expect further wage increases in the year ahead," McKellar said. "Enduring labour shortages mean businesses are working to recruit and retain staff through regular and ad hoc wage reviews, bonuses, promotions, and other incentives."

Impact of new workplace reforms

For the Business Council of Australia (BCA), the ABS findings revealed that the private sector was able to deliver strong wage growth even before huge workplace relations changes came into effect, warning that these could potentially affect the momentum.

"It's great news that wages are growing strongly but there is a risk that more rigidity and new hugely complex multi-employer agreements will stall our momentum," the BCA said in a statement. "Australians can't afford a system that slows down this strong private sector wages growth and forces them to wait while unions, lawyers, and businesses squabble over who can be at the negotiating table before they even get to discussing conditions and wages."

Employers across Australia have been calling out the government on its new multi-employer bargaining rules passed in December.

The Australian Industry Group previously said that there are some details on the new multi-employer bargaining provisions that "remain unclear and are obviously problematic."