Australia experienced its largest increase in wage growth in over 26 years, driven by a rise in the minimum wage and heightened pay demands across both the private and public sectors. According to the Australian Bureau of Statistics, the wage price index rose by 1.3% in the third quarter compared to the previous quarter, and 4.0% on an annual basis – the highest since early 2009.
In June, the Fair Work Commission, responsible for determining Australia’s minimum wage, announced a significant increase of 5.75%. Furthermore, the wages growth was fueled by substantial pay rises for aged-care workers and a removal of state government caps on pay hikes, alongside surging inflation.
Private-sector wages growth outpaced that of the public sector, registering at 4.2% annually compared to 3.5%. These figures represent the highest annual growth rates for both sectors since 2008 and 2011 respectively.
The recent interest rate hike by the Reserve Bank of Australia suggests that further increases may be on the horizon if inflation continues to put pressure on the economy. The central bank has also revised its forecast for inflation in 2024 and 2025.