Record wage surge in Australia faced by minimum wage hike
Australian wages have experienced an unprecedented surge, marking the most substantial quarterly increase on record. This sharp uptick is primarily attributed to a rise in minimum wage, benefitting millions of employees.
According to figures released by the Australian Bureau of Statistics (ABS), the wage price index rose 1.3% in the September quarter, aligning with forecasts and marking the largest quarterly rise in the series’ 26-year history. Annual pay growth accelerated to 4%, surpassing market expectations of 3.9% and representing the fastest growth since early 2009.
The surge is further fuelled by intense competition among employers vying for talent in a tight labour market. However, analysts cautioned that this spike is unlikely to become a recurring trend.
Sean Langcake, Head of Macroeconomics Forecasting for Oxford Economics Australia, described it as a “perfect storm for wage pressures”, attributing it to employees seeking to keep up with the rising costs of living, and a larger-than-usual increase in minimum and award wages.
A significant portion of the surge can be traced back to a mandated 5.75% increase in the minimum wage, covering two million employees. Additionally, the aged care sector witnessed a one-off 15% pay rise for 250,000 employees, while some public sectors had pandemic-era pay caps lifted during the quarter.
Public sector wage growth reached a 12-year high at 3.5%, while the private sector experienced growth of 4.2%, driven by organisations’ efforts to attract and retain talent in a highly competitive labour market.
Despite the robust employment landscape with unemployment hovering near 50-year lows at 3.6%, concerns are raised about the sustainability of such growth. The Reserve Bank of Australia (RBA), based on its consultations with organisations, suggested that the competition for employees is gradually subsiding, and it anticipated a moderation in wage growth throughout 2023, reported Reuters.