The labour market in Australia is posed for resilience in 2024, with anticipated wage increases outstripping inflation and a decrease in job cuts for the March quarter. Last September, the economy experienced a 1.3% hike in wages growth. Following this, in December wages grew by a subdued 0.95% with private-sector wages rising by just 0.88%. Much of this growth in December was driven by growth in the public sector, signalling that after years of enduring arbitrary wage caps, public sector workers are seeking some redress. Ultimately, wages are now growing faster than inflation as the wage price index rose 4.2% in 2023, while inflationary pressures were 4.05%.
Within our economy, half of all industries had stronger wage growth in the past year than inflation. In the past year, the Health and Social sector led wages growth with wages in the industry growing by 5.6%. The Education industry closely followed with wages here growing by 4.8%. This all exceeds the 4.05% inflation rate seen in 2023.
However, although wages grew at a faster pace than the general price level, they rose by less than the prices of non-discretionary items. This is accounted for due to the high marginal propensity to consume low and middle income earners’ experience. Hence, the average wage still buys about 5% less than it did in March 2020.
In terms of supply within the labour market, 36% of organisations expect the labour supply to increase. Much of this is driven by the strong hiring plans in the public sector with 46% indicating they would take on more staff. To address recruitment difficulties, 42% of surveyed firms will seek to undertake microeconomic reform and upskill their present employees through methods such as apprenticeships.
