Overall wage growth has declined, but the public sector saw a sharper slowdown, with annual growth falling to 2.8%.
According to latest data from the Australian Bureau of Statistics (ABS), annual wage growth in Australia slowed to 3.2% per year in 2024, marking the weakest rise since September 2022.
Quarterly wage growth fell to 0.7% in the December quarter, down from 0.9% in the last quarter.
ABS’s chief price statistics, Michelle Markart, said the slowdown has been pronounced in both the public sector, and the public sector is experiencing a more sharp decline.
“At 3.2%, the annual wage increase was down from 4.2% in the December quarter 2023, the lowest since September 2022,” she said.
Public sector wages increased by 2.8% per year, down from 3.7% in September, while private sector wages increased by 3.3%.
“This reduction in contribution is due to the timing of several wage contracts shifting outside the December quarter this year, due to the same period in 2023, when other contracts have expired or a slight increase. It was promoted,” Marquardt said.
RBAs are aware of inflation risks
Wage data was released the day after the Reserve Bank of Australia (RBA) cut its cash rate by 0.25 percentage points to 4.1%.
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The central bank said inflation has been eased enough to justify the movement.
However, RBA Governor Michele Bullock warned that he assumes further cuts will continue soon.
“We continue to test how low it is to maintain unemployment without inflationary pressure. So far, the good news is that we have achieved that. But there is a risk.” she said.
The RBA’s latest statement on monetary policy pointed to the ongoing strength of the labor market.
“There’s a lot of debate in the market about what level of unemployment or employment is consistent with low and stable inflation,” says Bullock.
The RBA also highlighted strong labor demands in the health sector, including hospitals and clinics. This has suggested that it would make it difficult for companies from various industries to find workers and would affect the broader job market.
Political disparities in relation to wage slowdowns
The slowing of wage growth sparked debate over the Albanese government’s economic policy.
Shadow Treasurer Angus Taylor accused the government of promoting inflation through excessive spending and “crowding” the private sector.
“Government policies make it difficult for businesses to keep costs down for finding workers,” he said.
But Treasurer Jim Chalmers defended the government’s approach, noting that wages are rising faster than inflation.
“We hope that Australians will earn more and maintain more what they earn,” he told ABC Radio National.
“Wages are growing faster than inflation, and this is what we’ve been working on.”
AAP contributed to this article
