Australia’s labor market is showing signs of stability, with wage growth moderating and productivity improving. While challenges remain, particularly for small and medium-sized enterprises (SMEs), the overall outlook is cautiously optimistic.
Employment Hero’s new SmartMatch Employment Report highlights steady gains in productivity and employment, while wage growth, especially in Construction & Trade Services, brings continued cost pressures. The report, based on data from over 1.1 million employees, indicates a median hourly wage of $42.20, up 3.8% year-on-year, with Construction & Trade Services leading at 8.4% growth, contrasted by Science & Technology’s 2.8% increase. Average hours worked rose 2.2% from August, marking a 1.3% year-on-year gain. Casual employment surged, with hours worked up 13.3% month-on-month, suggesting businesses are leaning into flexible staffing solutions. Casual wages rose 3.4% quarterly, while full-time wages growth dipped by 0.9%.
Ben Thompson, Employment Hero’s CEO, noted, “Our data indicates that while we are seeing early signs of stability, the cost of labour and continued wage pressures present a difficult balancing act for Australian businesses. As SMEs gear up for the end-of-year season, managing these rising costs without stalling productivity will be essential to economic resilience in the coming months.
“Our workforce is at a critical inflection point: the signs of economic recovery are emerging, and inflation is slowly coming down, however, the issue of unsustainable wage growth threatens to prematurely stunt this recovery. Now is the time for SMEs to be cautiously optimistic in the lead-up to the holiday season, which will be pivotal in determining the stability of Australia’s workforce and economy,” said Thompson.
Key Findings:
- Median Hourly Wage: At $42.20, median hourly wages increased by 3.8% year-on-year, reflecting sustained wage growth across most sectors. Construction & Trade Services led with a notable 8.4% annual growth, while Science & Technology saw slower gains at 2.8%, indicating a rebalancing across traditionally volatile sectors.
- Hours Worked: After months of decline, average hours worked showed slight improvement with a 2.2% increase month-on-month and a 1.3% annual rise, signalling tentative productivity gains as businesses focus on efficiency.
- Employment Type Shifts: Casual employment saw a sharp rise in hours worked, up 13.3% month-on-month, suggesting businesses are embracing flexible staffing options. Casual wages grew 0.5% monthly and 3.4% quarterly, while full-time annual wage growth dropped by 0.9% compared to August 2024.
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