Quarterly Wages Growth in Australia Reaches Record High, According to ABS

The Australian Bureau of Statistics (ABS) has reported that the Wage Price Index (WPI) experienced an unprecedented quarterly growth of 1.3% in the September quarter of 2023, marking the highest increase in the 26-year history of the WPI. On an annual basis, wages grew by 4.0%, representing the highest yearly growth since the March quarter of 2009.

Michelle Marquardt, Head of Prices Statistics at ABS, attributed this substantial growth to various factors, stating, “A combination of factors led to widespread increases in average hourly wages this quarter.”

In the private sector, the surge was primarily driven by the Fair Work Commission’s annual wage review decision, the Aged Care Work Value case, labor market pressure, and the incorporation of Consumer Price Index (CPI) rises into wage and salary review decisions. The public sector saw an impact from the removal of state wage caps and new enterprise agreements taking effect post the conclusion of various bargaining rounds.

Wage growth expanded across different methods of pay determination, with individual arrangements being the primary driver. Award and enterprise agreement jobs also contributed significantly to the growth in wages, surpassing historical trends for a September quarter.

On an annual basis, private sector wages grew at a higher rate (4.2%) than the public sector (3.5%). This marked the highest annual growth for the private sector since December quarter 2008 and for the public sector since June 2011.

Marquardt noted, “Many public sector jobs were affected by the ending of state wage caps and the resolution of wage negotiations. This resulted in initial or backdated increases being paid for jobs covered by the newly approved enterprise agreements.”

In terms of wage increases, the average change for all public and private sector jobs with a wage movement in the September quarter was 5.4%, up from 4.0% in the same quarter of 2022. This growth was primarily driven by private sector increases, with almost half of all private sector jobs recording an average increase of around 5.8%, compared to the public sector where 34% of jobs recorded an average pay rise of 3.3%.

The Accommodation and food services industry experienced the highest quarterly and annual growth rates, reaching 3.2% and 5.5%, respectively. Notably, the Health care and social assistance industry also saw substantial wage growth, with a quarterly increase of 3.1% and an annual increase of 4.9%.

However, the Mining industry recorded the lowest quarterly index growth (0.8%), and the Finance and insurance services industry posted the lowest annual growth (3.1%).