Average weekly earnings

IBISWorld forecasts average weekly earnings to rise 0.2% during 2024-25 to reach $1,459.39. As the economy has recovered from the pandemic and unemployment is expected to remain low by historical standards, average weekly earnings are anticipated to rise. The persistence of a tight labour market and high inflation is set to drive wage growth as more businesses look to lift wages to attract workers, which will contribute to a further rise in average weekly earnings. As outlined by the Fair Work Commission Award, wages are also rising, including a 3.75 per cent increase in the national minimum wage and all modern award wages, effective July 1st, 2024. The national minimum hourly wage will increase from $23.23 to $24.10. This is set to underpin growth in average weekly earnings. However, growth in 2024-25 is likely to be partially limited by an uptick in unemployment, even though it is likely to remain low by historical standards.

Real GDP growth is the main driver of average weekly gross earnings. Despite the COVID-19 pandemic, real GDP has risen over the past five years, driven by greater government spending and increasing business profit. During the immediate stages of the pandemic, average weekly earnings surged. This was largely due to unprecedented levels of economic stimulus from the Federal Government despite turbulent economic conditions. As pandemic-related stimulus measures were reigned in, average weekly earnings slowed in 2020-21.

Over the past decade, wage growth in Australia has remained relatively stagnant, resulting in subdued increases in average weekly earnings. The Reserve Bank of Australia and the Department of the Treasury attribute this trend to factors like excess capacity in the labour market, low rates of voluntary job turnover, diminished inflation expectations and a decline in terms of trade following the end of the mining boom. However, the COVID-19 pandemic brought a significant shift. As restrictions eased in 2021-22, economic activity accelerated, international travel resumed and unemployment rates fell sharply. Industries heavily impacted by the pandemic, such as hospitality and tourism, faced acute labour shortages. This, coupled with inflationary pressure and a high number of job vacancies, led to a notable surge in average weekly earnings in 2022-23. Despite this upswing, a subsequent rise in unemployment has begun to temper wage growth. According to IBISWorld, average weekly earnings are forecast to increase at a compound annual rate of 2.6% over the five years through 2024-25, indicating a cautious but steady upwards trend in earnings moving forward.