The gap between public and private sector wages appears to be widening, with new data revealing slower pay growth for government workers.
Wages in Australia have seen a 4.1 percent increase at an annual rate, slightly lower than market expectations.
Economists had forecasted a growth rate matching last year’s 4.2 percent. However, over the first three months of the year, wages only rose by 0.8 percent, falling short of the market’s anticipated 0.9 percent.
The Australian Bureau of Statistics (ABS) has released its latest data on the Wage Price Index (WPI). According to Michelle Marquardt, head of prices statistics at the ABS, the annual all sectors wage growth has consistently remained at or above 4 percent since September quarter 2023, a level not seen for three consecutive quarters since March quarter 2009. In contrast, public sector annual wage growth was 3.8 percent, down from 4.3 percent in December 2023 but higher than the previous year’s 3.0 percent. Quarterly wage growth saw a modest increase of 0.8 percent, the smallest rise since December quarter 2022. Private sector wages outpaced those in the public sector, with a growth rate of 0.8 percent compared to 0.5 percent. This marks the smallest increase in private sector wages since March quarter 2022.
Marquardt explained that last year’s March quarter results for the public sector were influenced by the implementation of new enterprise agreements and changes to wage caps. Many jobs covered by these agreements received scheduled rises in the September or December quarters of the previous year rather than in March quarter 2024.
Kylie Green Managing Director, APAC, Reward Gateway: “While today’s increase in the Wage Price Index (WPI) is a positive move towards alleviating cost of living pressures for employees, the impact varies across sectors. The data reveals the public sector lags behind on wage growth with just 18% of employees receiving a pay rise in March quarter 2024 compared to 38% in March quarter 2023. In the private sector however, total hourly rates of pay excluding bonuses are up by 0.8%, and are seeing their highest annual growth for the sector since December 2008. “While this is a step in the right direction for employees in the private sector, it simply isn’t enough to keep up with the rising cost of living with industries like retail trade, accommodation and food services having grown by less than 0.02 percentage points over the last quarter.
“At a time where significant business-wide pay increases might not be a viable option, it’s important that employers recognise alternative support they can provide outside of salary adjustments to mitigate the rising costs of living for their people while also keeping business costs low. Banking & finance, tech, food & beverage, manufacturing, healthcare, construction & engineering and not for profit sectors already recognise this trend, with our data showing employers in these sectors are most likely to provide benefits to their employees outside of salary adjustments.
“Whether businesses provide discounts or benefits to help save on everyday items like grocery, petrol and popular retailers, organisations need to think outside the box to help make up the shortfall. Our own data shows an extraordinary shift in the benefits our customers are opting for, with grocery and fuel discounts now becoming the most popular benefit on our platform. Overall, the impact of including a benefits scheme into a remuneration package can increase disposable incomes by up to 10%.”
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
