Latest data available, updated 16 November 2023
The tight labour market since the end of the pandemic has delivered the highest rate of wages and earnings growth in Australia in over a decade.
Australian wage rates grew by 4.0% p.a. in the year to the September quarter of 2023. Following a period of low growth during the pandemic, wage rates have been consistently rising since late 2021. The current rate of wages growth is the highest since 2012, and is above the long-run average of 2.3% p.a.
Employee earnings grew by 3.9% p.a. in the year to May 2023. 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 2.7% p.a.
Private sector wages growth (4.2% p.a.) is currently higher than in the public sector (3.5%). Employee earnings growth follows the same pattern (4.1% p.a. private versus 3.3% public). This reflects higher rates of EBA coverage in the public sector, which lags public wages movements behind the private sector.
Wage rates are currently growing at above average rates in industries facing acute skills shortages – particularly accommodation and food, health care, arts and recreation, transport, retail, manufacturing, and construction. Wage increases are below average in industries dominated by public sector employment, such as public administration and education.
Both the Treasury and RBA forecast that wage increases will peak at around 4.0% in early 2024, before easing slightly towards 3.5% in 2025. This reflects the tight labour market in Australia, particularly an overhang of unfilled vacant jobs. These forecasts indicate that wage increases will exceed the long-term average (2.3%) through to 2025.
Newly-approved EBAs averaged a 3.8% p.a. wage increased in the June 2023 quarter, with private sector EBAs slightly higher at 3.9%. This is the fastest rate of increase in newly-approved EBA wages seen since 1994.
The FWC National Minimum Wage decision of 5.75% for 2023-24 is the highest in over a decade, exceeding a record set in the previous year. 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
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