'It is imperative for governments to lead a return to wage moderation across Australia'
Employers across Australia are warning of "deleterious consequences" from excessive wage growth as they called on the government to moderate wages across the country.
Innes Willox, chief executive of national employer association Ai Group, said the impact of wages pressures on businesses is being felt across the economy.
"Private sector employment and capital expenditure have both been flat for the last year, at a time when the economy needs them the most," Willox said in a statement.
"Excessive wages growth will have deleterious consequences for the prospects of a durable return to growth. With inflation now having significantly lowered, it is imperative for governments to lead a return to wage moderation across Australia."
Willox made the remarks as data from the Australian Bureau of Statistics showed that the bill footed by non-mining employers forwages has grown 25.8% since the pandemic.
This increase is much faster than the 18.3% rise in sales income during the same period.
"With wages growing much faster than income, businesses have had to wear the difference on the balance sheet. There has been no growth in non-mining business profits for the last two years as a result," Willox said.
Australia recently saw two record-setting minimum wage increases from 2022-23 (5.18%) and 2023-24 (5.75%), before slowing down to 3.75% in 2024-25.
According to the Wage Price Index, wages grew 3.5% in the year to the September 2024 quarter, slightly slower than the 4.1% growth rate in the quarter prior.
Despite this, the Ai Group noted that annual growth in wages has been above three per cent since late 2022, much higher than the 2.4% long-run annual average.
A manifestation of soaring wages' impact in the economy is the lack of growth in private sector employment, which Willox previously described as "more fragile."
In January, the chief executive warned that employment in Australia is increasingly driven by two groups: first, the public sector, which saw a 17% growth in employment since 2019.
The second is the non-market private industries of health, education, and public administration that saw a 43% growth in the same period.
On the other hand, Australia's private sector has only added nine per cent more jobs.
"Employers concur with Jim Chalmers' assessment that 'the best kind of growth is private sector-led growth.' It is therefore imperative that governments make restarting investment, job creation and growth in the private sector a top priority for 2025," Willox previously said.
