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Healthcare & construction see wage growth, hospitality hit hard

Australia’s wage growth story is a tale of two cities: while healthcare and construction workers see healthy bumps in their pay checks, hospitality and retail employees face stagnant wages and even cuts. 

New data reveals a widening gap between sectors, raising concerns about economic stability and the future of low-paid workers. Amid turbulent times for Australian small businesses, Employment Hero’s latest SME Index highlights significant wage discrepancies across various sectors, painting a complex picture of winners and losers in wage growth.

Wage Growth Winners & Losers: Crumbs for Hospitality Workers

Retail and hospitality workers, often among the lowest paid, saw their wages drop by 1.3% in May, bringing their hourly rate to $33.10. This decline continues a downward trend seen since the start of 2024, adding to concerns for both workers and business owners in the sector.

Conversely, the technology sector, despite boasting the highest hourly rate at $55.79, experienced the largest monthly wage drop of 3.3%. This suggests ongoing challenges in maintaining competitive pay within the industry amid economic pressures.

Healthcare professionals saw robust annual wage growth of 7.5%, reflecting the high demand for services. Despite a 2.2% monthly dip, the sector remains strong overall.

Construction and trade recorded steady wage growth, with hourly rates increasing to $40.35, marking a 6.2% annual rise. Monthly growth was 0.7%, indicating consistent upward momentum following recent slumps.

Overall, Australia’s average hourly rate fell by 1.4% in May to $38.67. However, year-on-year, the average rate grew by 8%, far outpacing the current inflation rate of 3.6%.

Wages Signal Wider Economic Implications

Ben Thompson, Co-Founder and CEO of Employment Hero, commented: “The disparity in wage growth across industries paints a complex picture of the Australian economy right now. While the tech sector’s wage drop may signal an adjustment period, the overall high pay levels suggest sustained investment and demand. Conversely, the retail and hospitality sector’s slower wage growth highlights challenges in maintaining profitability amid fluctuating consumer spending.”

Thompson warned that unchecked wage growth in certain sectors might contribute to further inflation, posing risks to economic stability. He emphasized the need for similar attention to the struggles of retail and hospitality workers.

Healthcare & Construction Leading in Business Growth

The report noted a 0.5% increase in overall employee growth over the past month, with an annual growth rate of 7.0% in May. The healthcare sector saw the highest annual employee growth at 9.4%, underscoring the sector’s critical role post-pandemic. The construction and trade sector followed closely, with an 8.7% monthly growth rate, driven by ongoing infrastructure projects and demand for skilled labor.

In contrast, the technology sector recorded the lowest employee growth at just 0.1% monthly, despite leading in wage rates.

Job Stability Fading for Hospo, Retail

Median hours worked remained relatively stable across most sectors, averaging 141.9 hours per month. Construction and trade employees worked the most hours, averaging 167.7 in May, a 0.4% drop from the previous month.

Healthcare sector employees averaged 105.1 hours, with a 1.1% drop in May, aligning with the sector’s overall growth trajectory.

However, the retail and hospitality sector continued its decline, with median hours dropping by 2.5%, the steepest fall among all industries. As venues shut down across the country, more hardship looms for workers in this struggling sector.

Eddie Kowalski, Senior Insights Manager at Employment Hero, said: “The stability in median hours worked across most sectors is encouraging, particularly in construction and trade services, which saw the least decline. This resilience can perhaps be attributed to the ongoing demand for workers on large-scale infrastructure projects across the country.

“Meanwhile, the healthcare sector continues to show high numbers of hours worked despite a slight drop, reflecting its critical role and growth trajectory which can somewhat be attributed to a rising population. However, the significant decrease in hours in the retail and hospitality sector highlights ongoing challenges and the need for strategic adaptation to shifting consumer behaviours, but even more so, it represents yet another concrete sign of struggle that signals a greater need for government support for small businesses.”

Mr Thompson added: “The retail and hospitality sector is particularly vulnerable in the current economic climate. Business owners are strapped for cash and the declining wages and reduced hours are symptomatic of broader financial pressures these businesses are facing. This trend not only impacts employees but also overall consumer spending and economic stability. Addressing these challenges is crucial for the health of the broader economy, and businesses need to now explore sustainable strategies to navigate these challenges and support their workforce as a direct result.”

The SME Index offers a detailed overview of the current economic landscape, highlighting the need for balanced growth across all sectors. While wage growth is a positive indicator of economic recovery, it must be carefully managed to prevent inflationary risks. The insights provided by the Index enable businesses and policymakers to make informed decisions that support sustainable economic development.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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