Annual wage growth in Australia has seen an uptick for the first time since June 2024, with a notable increase of 0.9% in the March quarter and a year-on-year rise of 3.4%, according to the Australian Bureau of Statistics’ wage price index. However, this resurgence in wages likely won’t influence the Reserve Bank’s interest rate decisions in its upcoming meeting.
This marks the first annual increase since mid-2024 and only the second rise since December 2023. The latest figures show that while wages are finally beginning to align with inflation, which has increased by 2.4% and core inflation by 2.9% during the same period, the situation still reflects a balancing act for working households as they navigate rising living costs.
Michelle Marquardt, head of price statistics at the ABS, noted, “Annual wage growth ticked up for the first time since the June quarter 2024.” The increase of 3.4% when comparing to the previous year exceeds the 3.2% recorded for the December 2024 quarter, though it falls short of the 4.0% noted during the same timeframe last year.
Despite this positive quarterly performance, experts predict that the Reserve Bank of Australia (RBA) will not be swayed to alter interest rates, which suggests a likely 25-basis-point cut at its next meeting. Economists assert that although wage growth remains above long-term averages, it has moderated considerably from last year’s highs. RSM Australia economist Devika Shivadekar emphasised the RBA’s projection that wage growth will stabilise around 3.4% for 2025, subsequently easing to 3.1% in 2026.
The recent data is indicative of a cautious optimism regarding wage growth, especially when considering the persistent concerns surrounding productivity. While wage growth in the public sector has outpaced that in the private sector, it’s notable that over half of last quarter’s wage rise was attributed to new enterprise agreements, a fact that has been highlighted by unions in their advocacy.
ACTU president Michele O’Neil celebrated the wage data as a key indicator that workers are beginning to recover after a lengthy period of stagnant wage growth amid global inflation pressures. O’Neil remarked on the importance of enabling more workers to negotiate their wages and conditions, hinting at further challenges ahead, but acknowledging this as a significant step forward for Australian workers.
In summary, while wage growth shows signs of recovery, the path ahead remains complex, with economic conditions and inflation dynamics playing crucial roles in shaping future developments.