Latest data available, updated 20 November 2024
Australian wages grew by 3.5% in the year to the September quarter 2024, slowing from the 4.1% growth rate recorded in the June quarter 2024. Annual growth in wages has been above 3.0% since late 2022, well above the long-run average of 2.4% p.a.
Employee earnings grew by 4.6% p.a. in the year to May 2024. Employee earnings are growing faster than wage rates due to an increase in hours worked in the current labour market cycle. The current rate of earnings growth is above its long-run average of 2.9% p.a.
Public sector wages growth (3.7% p.a.) is currently higher than in the private sector (3.5%). Employee earnings growth is higher for both (4.6% p.a. for both public and private). This is the first quarter in which annual public sector wage growth has surpassed private sector growth since the last quarter of 2020.
Wage rates are currently growing at above average rates across industries – particularly arts and recreation, administration, wholesale trade, finance and insurance, mining, accommodation and food. Industries with lower wage growth are construction, professional services, utilities, real estate and manufacturing.
The RBA predicts that wages growth will ease to 3.4% during 2024-25 and then to 3.1% by the end of 2026. Meanwhile, the Treasury forecasts a growth rate of 3.25% by mid-2026. The tight labour market in Australia is expected to soften gradually to the end of 2026. These forecasts indicate that wage increases are expected to exceed the long-term average (2.4%) through to 2026.
Newly approved EBAs averaged a 4.0% p.a. increase in the June quarter 2024. Private sector EBAs were at 4.0%, the highest rate in approved private sector EBAs in 12 years, while public sector EBAs were slightly lower at 3.9%.
The FWC National Minimum Wage increase for 2024-25 is 3.75%. This follows two years of record-setting increases. Recent minimum wage decisions have been well-above underlying economic performance (as measured by GDP growth).
The Wage Price Index (WPI) measures changes in the wage rates of Australian employees across the economy. It is calculated using a similar methodology to the Consumer Price Index, based on a representative ‘basket’ of occupations in each industry and location. The WPI is generally seen to be the most timely and reliable indicator of the rate of change in wages across the economy.
The Average Weekly Ordinary Time Earnings (AWOTE) indicator measures changes in the earnings (i.e. take home pay) for full-time adult employees. Unlike the WPI, the AWOTE is affected by compositional changes in the workforce (such as changes in industry and occupation). AWOTE provides an indicator of changes in the total value of wages paid in the economy that reflects the current composition of the workforce.
The Average Annual Wage Increases (AAWI) indicator measures the average wage increase agreed in federally-registered Enterprise Bargaining Agreements (EBAs). Two series are provided: wage increases in newly approved EBAs during the quarter, and wage increases occurring in the quarter as a result of previously-approved EBAs. Only those EBAs with ‘classifiable’ wage increases (i.e. those which can be numerically expressed at the time of agreement) are included in the data. The newly-approved AAWI series provides an indicator of recent movements in EBA wage outcomes.
The National Minimum Wage (NMW) is determined by the Fair Work Commission annually for each financial year. It sets the minimum hourly rate for employees with receive the NMW, and influences awards which are linked to it. Approximately one fifth of the Australian workforce receive the NMW or an NMW-linked award rate.
Sources: The data in this factsheet are derived from various ABS labour surveys and other official sources. Data is collected on a quarterly or biannual basis, and is typically released two or three months following the reference period. Ai Group Research & Economics will update this factsheet as new data is released. Refer to notes in the charts for links to the source data.
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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