Government-Funded Pay Rises Drive Wage Growth in Early 2025

ABS figures reveal modest real wage growth in early 2025, led by aged care, education and health agreements.

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Wages grew slightly more than expected at the start of 2025, offering households a modest recovery in purchasing power after years of high inflation, according to ABS data released on May 14.

The wage price index rose 0.9 percent in the March quarter, lifting annual wage growth to 3.4 percent, just ahead of the 2.4 percent rise in consumer prices.

The increase was largely driven by stronger growth in the public sector, where wages rose 1.0 percent, compared to 0.9 percent in the private sector.

Much of the boost came from government-funded wage decisions in care-related sectors, including the Stage 3 Aged Care Work Value case, retention payments for early childhood educators, and new state-based enterprise agreements in health and education.

“Annual wage growth ticked up for the first time since the June quarter 2024,” said ABS Head of Prices Statistics Michelle Marquardt.

Private Sector Slows Under Pressure

While public sector wages rose 3.6 percent over the year, private sector growth slowed to 3.3 percent—down from a peak of 4.2 percent in 2024.

Economists say the slowdown reflects the mounting pressure on businesses from high interest rates, weaker demand, rising costs, and softening productivity.

Public sector wages have surged due to new enterprise agreements and targeted increases for nurses, aged care workers, and educators.

Government Welcomes Wage Figures

The government quickly seized on the wage growth figures as evidence of its policies taking effect.

Treasurer Jim Chalmers and Employment Minister Amanda Rishworth welcomed the figure.

“We’re really pleased with today’s figures which show annual real wages have now grown for six quarters in a row, after going badly backwards under the previous Liberal government and falling for the five quarters in the lead up to the 2022 election,” they said in a joint statement.

“Australians voted for higher wages at the election, and that’s what today’s numbers show.”

The ministers also noted the creation of more than one million jobs since 2022, calling it a record for a parliamentary term.

“We’re acting to boost wages, close the gender pay gap, deliver workplace relations reforms and secure pay rises for some of the lowest-paid workers in our community,” they said.

“Our support for the lowest paid workers means minimum wage earners are now earning $143.30 per week more than when we came to government.”

Still, the ministers warned that global uncertainty could weigh on the economy in the years ahead, and that more work was needed to support Australians facing ongoing cost-of-living pressures.