Australian Wage Growth Hits Historic High in September Quarter 2023

In a historic development, Australia witnessed the Wage Price Index (WPI) surge by 1.3% in the September quarter, marking the highest quarterly rise in the 26-year history of the series. The annual rise, standing at 4.0%, represents the highest growth recorded since March 2009. The private sector was the primary contributor to this surge, posting a remarkable 1.4% increase, while the public sector also recorded its highest growth (0.9%) for a September quarter since 2010.

Private Sector Dominance:

The private sector's substantial contribution was fueled by wage growth in individual arrangement jobs, where negotiated wage rises were benchmarked against the Fair Work Commission Annual Wage Review 2022–23 and an elevated Consumer Price Index (CPI). Wages for jobs covered by awards and enterprise agreements also witnessed significant increases, contributing higher percentage points to wage growth than historically recorded for a September quarter.

Industry Impact:

The Health care and social assistance industry played a pivotal role in driving overall wage growth, contributing 3.1%. The implementation of the Fair Work Commission Aged Care Work Value case significantly influenced wage changes in this sector, leading to increases ranging from 5.75% to 21%.

Sector-Wise Comparison:

Annually, seasonally adjusted private sector wages growth outpaced the public sector (4.2% compared to 3.5%). This marks the highest annual growth for the private sector since December quarter 2008 and for the public sector since June 2011. Almost half of all private sector jobs recorded a wage movement, with an average hourly wage increase of 5.8%. Meanwhile, the public sector saw an increase in both the proportion of jobs with wage movement and the average hourly wage change.

Positive Job Market Trends:

At the Australia all-sector level, the September quarter saw more jobs recording a wage movement compared to the same period last year (46% compared to 43% in September quarter 2022). The average wage change was significantly higher at 5.4%, compared to 4.0% in the previous year.

Future Outlook:

The notable increase in wage growth, influenced by various factors including economic recovery, individual arrangements, and industry-specific decisions, signals positive trends in the Australian job market. The continued expansion of jobs recording an annualized increase above 3% reflects the resilience of the job market amid ongoing economic challenges.

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