Australian wages growth maintained a steady pace in the June quarter rising by 0.8% and 3.2% in annual terms, in line with expectations and around RBA forecasts. Scheduled increases under enterprise agreements drove wages growth in the public sector (0.9%q/q, 3.4%Y/Y), again outpacing the private sector (0.7%q/q, 3.1%Y/Y). Although the unemployment rate has risen a little since the start of the year, wages growth has been unaffected. If anything, wages growth is more likely to rise following the Fair Work Commission's review decision to lift award rates by 4.75%, a larger-than-expected increase; however, that does not come into effect until the start of the next quarter.
The structure of the labour market sees wages growth receive a bump in the September quarter, the first quarter of the new financial year as increases to the minimum wage and awards and private sector reviews come into effect. In the intervening quarters, wages growth tends to see little change.
That was the case in today's report as wages growth recorded its 5th consecutive quarterly increase of 0.8%. The annual pace was steady at 3.2%, down slightly from its pace a year ago (3.4%) but well below cycle highs (4.3%) in late 2023. In 3- and 6-month annualised terms, wages growth remained in the 3.2-3.3% range.
Beneath the surface, wages in almost 80% of jobs is now rising at a pace below 4%, the largest share in 4 years. That has seen the share of jobs with wage rises above 6% falling to its lowest since mid 2022. At the other end of the spectrum, around 4% of jobs are seeing a wage cut.
In the private sector, wages growth eased slightly to 0.7% in the quarter from 0.8% previously. That saw the annual pace slow from 3.2% to 3.1%, its weakest pace in 4 years. However, it is diffciult to read too much into that given the ABS reported only 10% of jobs saw a wage change in the June quarter.
As mentioned above, that will rise significantly in the next quarter as the award increase flows through and the data captures end-of-financial year wage reviews. As it stands though, for those jobs that saw a wage change, the average increase was 3.9%. That is unchanged from a year earlier but materially slower than at its peak of almost 6% in 2023. Wage increases have cooled alongside slowing inflation, while it also reflects reduced tightness in the labour market.
It is slightly a different story in the public sector. That sector is typically less exposed to changes in underlying labour market conditions, while new agreements take time to implement and have often been playing catch-up to inflation in past years. New agreements at the state and commonwealth levels boosted public sector wages growth to 0.9% in the June quarter, sustaining a 3.4% year-on-year pace. Annual wages growth in the public sector has outpaced the private sector since early last year.
