Australian wages growth was 0.8% in the March quarter, with the annual pace easing slightly from 3.4% to 3.3%. These outcomes were broadly in line with expectations and RBA forecasts. There was little change in the pace of private sector wages growth, but the public sector saw a notable slowing after several new wage agreements went through in recent quarters.
Wage inflation in the Australian labour market continues to track a solid pace. The headline Wage Price Index printed at 0.8% for the third quarter in succession in the March quarter. The major influence on quarterly wages growth came from enterprise agreements, largely linked to the public sector in Queensland (1.1%) as well as new policies in childhood education.
Base effects saw annual growth ease from 3.4% to 3.3% but has seen little change for more than a year now. Underlying conditions in the labour market have loosened a little since the back half of last year but importantly remained consistent with being tight in the RBA's judgement. This has been a key factor behind the RBA's 3 rate hikes so far this year, which have sought to respond to inflation rising above target again.
Private sector wages growth matched growth in the headline index at 0.8% in the quarter but was slightly softer in annual terms at 3.2%. Wages growth in the sector has slowed from a peak of 4.3% in the back half of 2023, though it has been broadly stable in the 3.3% area since late 2024. ABS analysis reported that the average pay rise in the private sector was 4% - but only 13% of jobs saw a wage change in the March quarter.
Over in the public sector, wages growth has been more volatile in recent times than is typically the case, due to new wage agreements coming into effect. In the latest quarter, wages growth stepped down to 0.5% - its slowest outcome in two years. The annual pace slowed from 4% to 3.3%, a movement accentuated by base effects.
