‘Bump in the road': Labour market warning after ABS reveals sluggish wage growth for Aussie workers

News.com.au

3 days ago

The era of bumper pay rises could be dead for Aussies amid new figures revealing sluggish wage growth over the last quarter – with warnings now emerging the country's labour market has hit a 'bump in the road'.
The wage price index rose only 0.8 per cent over the 2025 June quarter and 3.4 per cent annually, according to seasonally adjusted data released by the Australian Bureau of Statistics (ABS).
The growth was largely unchanged from the March quarter but down from the 4.1 per cent growth at the same time last year, ABS head of prices statistics Michelle Marquardt said.
'The share of wage changes greater than 4 per cent has declined since this time last year,' Ms Marquardt said.
'The smaller proportion of jobs with larger wage increases has contributed to lower overall wage growth.'
Private sector wages rose 0.8 per cent over June 2025 compared with a 1 per cent growth for the public sector.
Ms Marquardt said this reflected backdated pay rises from recently approved state-based enterprise agreements coming into effect for the public sector in addition to regularly scheduled pay rises.
But both sectors recorded lower annual wage growth compared with last year's June quarter.
Jobs in the mining, electricity, gas, water and waste services industries recorded the highest quarterly rise with a 1.3 per cent increase.
The retail industry was the lowest – just a 0.2 per cent quarterly growth – while the finance and industry services had the lowest through-the-year growth at 2.6 per cent.
In the first quarter of 2025, wages grew by 0.9 per cent and 3.4 per cent year on year.
Real wages rose by 1.3 per cent over the year to June 2025 - something leading firm KPMG says is the seventh consecutive quarter of real wage gains.
'This improvement has occurred alongside a decline in inflation from 7.8 per cent in December 2022 to 2.1 per cent, undermining claims of a wage-price spiral,' KPMG chief Economist Brendan Rynne said
'Without improvements in labour productivity, these gains can only go so far.
'Productivity growth is essential for ensuring continued real wage increases and easing pressure on businesses.'
However, Deloitte has warned that the labour market has hit a 'bump in the road' off the back of modest growth in the economy.
Total jobs growth slowed at the midpoint of 2025, with the employment growth over the months of May and June close to zero, Deloitte Access Economics partner David Rumbens said.
'The number of unemployed Australians now sits at 659,600 people – the highest level since late 2021 – which has seen the unemployment rate increase to 4.3 per cent,' he said.
'The recent jobs flat patch has seen overall annual employment growth moderate to 2.0 per cent (286,300 workers).
'(It's) still solid but below the pre-pandemic average.'
Mr Rumbens said the overall numbers masked sectoral imbalances – pointing to the health care, education and public administration areas accounting for more than two-thirds of total employment gains in the year to March quarter 2025.
The number of employed Australians is expected to rise over coming years, albeit at a slower rate than post-pandemic levels.
'Contained inflation, declining interest rates, and gradual real wage gains are expected to strengthen parts of the market sector, particularly across industries exposed to the willingness and capacity of households to spend,' Mr Rumbens said.
'Overall, market sector employment is expected to grow by 0.9 per cent (86,500 workers) in 2025-26.'