Wages growth in Australia is at 2.5%, the lowest since records began


Australian workers, used to fairly solid wages rise each year for the past two decades, are faced with an economy unable to deliver the types of increases many expect.

That’s the message in recent wages rise which have sat at series lows. It is also the message in the federal government’s recent defence employees wages round, and the message in this morning’s release of the wage price index for the December 2014 quarter.

The ABS reported that wages grew 0.6%, as expected but this left year on year growth at just 2.5% for 2014.

That’s only a slight dip on the recent 2.6% yoy growth rate but 2.5% is a fresh low for this wage price index series which dates back to 1997.

Looking at the private/public break up the ABS said:

Private sector seasonally adjusted wage growth in the December quarter was 0.6 per cent and Public sector wages grew 0.7 per cent. Over the last year Public sector wages grew at a faster rate than the Private sector, 2.7 per cent compared to 2.5 per cent. Public sector wage growth is being driven by State and Local government employee pay increases.

Public sector did best on the quarter followed by education and financial services but overall the result points to growing disquiet in the community about slowing wage growth.


The slowdown in wages growth is one input into the bleak outlook consumers continue to hold for their personal finances a year out. This is also one of the key drivers in consumer confidence has been unable to improve.

This looks and feels like a paradigm shift for Australian workers as the economy searches for competitiveness.