Workers bringing in higher pay but gains to slow

Workers can still expect decent wage growth but the record-breaking gains of the past quarter are unlikely to continue.

An updated wage price index from the Australian Bureau of Statistics on Wednesday will provide a snapshot of base pay movements across the economy.

Current up to December 2023, economists expect solid wage growth though not as strong as the record-breaking September numbers.

A 1.3 per cent increase in the three months to September was the highest quarterly growth rate on record, bringing the annual rate to a four per cent.

The strong rise was helped along by one-off boosts that will disappear in the December count.

This included the industrial umpire’s minimum and award wage decisions, which kicked in on July 1.

But the December report will likely reveal still-strong demand for workers, with employers likely needing to bump salary packages higher to keep staff or attract new recruits.

St George economist Jarek Kowcza said the pace of wage growth was either at or past its peak, with forward-looking measures of private sector wages, such as advertised salaries, now stabilising.

“While measures such as recruitment difficulty have been falling, which suggest easing wage pressures,” he said.

The bank’s economists expect the quarterly pace to slow to 0.9 per cent, which would take the annual rate to 4.1 per cent.

While nominal wages have been moving higher, inflation has been growing faster, eroding buying power.

But real wage growth can be expected earlier this year, based on Treasury forecasts, as inflation cools and pay gains stabilise.