Australia’s wage growth held steady in the June quarter, with the Wage Price Index (WPI) rising 0.8% over the quarter and 3.4% annually, according to seasonally adjusted figures from the Australian Bureau of Statistics (ABS).
“Annual wage growth to the June quarter 2025 was unchanged from the 3.4% rise seen in the March quarter 2025 but was down from the 4.1 per cent growth at the same time last year,” Michelle Marquardt (pictured left), ABS head of prices statistics, said in a media release.
The 0.8% quarterly rise was slightly weaker than the 0.9% increase in the March quarter.
Marquardt noted a shift in the size of wage increases compared to last year.
“The share of wage changes greater than 4% has declined since this time last year,” she said. “The smaller proportion of jobs with larger wage increases has contributed to lower overall wage growth.”
This moderation in wage pressures may influence Reserve Bank (RBA) thinking on interest rates, particularly for mortgage holders watching inflation trends closely.
Seasonally adjusted private sector wages rose 0.8% in the June quarter, while public sector wages increased 1.0%.
“This quarter’s lift in the public sector reflected backdated pay rises from recently approved state-based enterprise agreements coming into effect, coupled with regular scheduled pay increases,” Marquardt said.
Both private and public sector wage growth slowed compared to the June quarter 2024. Private sector wages rose 3.4% over the year, down from 4.1% a year earlier, while public sector wages increased 3.7%, easing from 3.9% in the same period last year.
Labour market pressures remain a key factor for the RBA’s monetary policy outlook, with softer wage growth accompanied by mixed employment signals. While the ABS data shows wages holding steady, alternative measures of labour market slack suggest more Australians are seeking work or extra hours than headline figures indicate.
New Roy Morgan data shows that in July, Australia’s “real” unemployment was virtually unchanged at 10.3% (1.64 million people), but under-employment surged to 10.9% (1.74 million people) – the first time since January that under-employment has been higher than unemployment.
“Although unemployment was virtually unchanged at 1,644,000 (10.3%, down 0.1%), there was a surge in under-employment, up 157,000 to 1,737,000 (10.9%, up 1%),” Roy Morgan CEO Michele Levine (pictured right) said.
“The increase in under-employment was correlated to a surge in part-time employment, which increased by 75,000 to 5,097,000 – the highest level of part-time employment so far this year. In contrast, full-time employment was slightly down by 22,000 to 9,189,000 in July.”
Levine added that overall unemployment and under-employment combined now account for 21.2% of the workforce – over 3.38 million Australians – and that labour under-utilisation has remained above 3 million for eight consecutive months.
For brokers, the combination of steady wage growth and rising under-employment suggests a labour market losing momentum, which could temper inflation pressures over time. If this trend continues, it may strengthen the case for RBA to keep interest rates on hold or consider cuts, potentially improving borrowing capacity in the months ahead.
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