The Employment Hero SME Index for January has shown that the median hourly wages have risen by 1.6 per cent since December, indicating the second month of consecutive growth following a two-month period of no growth.
Moreover, when comparing the data to the same period last year, the report highlights that median hourly wages have climbed by 7.9 per cent. In contrast, the Consumer Price Index (CPI) rose by 7.8 per cent over the twelve months to the December 2022 quarter. This suggests that wages have outpaced inflation, which is an encouraging trend for Australian workers.
The data also shows that higher candidate demand in the labour market, particularly in specialised industries, has influenced this increase in wages. This indicates that businesses are willing to pay higher wages to attract and retain the best talent in a competitive labour market.
In January, employees working in Australian SMEs had a median hourly rate of $35.96. The Northern Territory and West Australia experienced the most significant month-on-month growth in median hourly rates, with an increase of 2.7 per cent. South Australia followed with a growth rate of 2.0 per cent, and New South Wales with 1.9 per cent. The ACT saw a slight decline in the median hourly rate at -0.1 per cent, while Victoria experienced marginal growth at 1.2 per cent.
Looking at year-on-year growth, Queensland recorded the most significant increase in median hourly rates for employees at nine percent, with South Australia and West Australia following at 8.2 per cent each and Victoria at 7.7 per cent. The Northern Territory had the smallest increase in median hourly rates at 5.3 per cent.
The report indicates that the median hourly rate for SME employees in Australia varies across states and territories, with some regions experiencing more significant growth than others. However, the median hourly rate for SME employees across the country remains relatively high, which reflects the strong labour market and competitive wages in the SME sector.
Since January 2022, all industries in Australia have experienced growth. The Healthcare and Community Services sector of SMEs showed the most substantial growth at 9.8 per cent, followed by Retail, Hospitality, and Tourism at 7.4 per cent. Manufacturing, Transport, and Logistics SMEs saw a 6.9 per cent increase, while SMEs in Science, Information, and Communication Technology experienced a 6.6 per cent growth rate. Construction and Trade Services grew by 6.0 per cent.
In comparison to the previous year, SMEs of all sizes have reported growth. However, small enterprises continue to face challenges, with no month-on-month growth reported. Smaller enterprises with 1-19 employees increased in NET employee numbers by 6.2 per cent since January 2022 but did not experience any month-on-month growth.
Medium enterprises with 20-199 employees grew by 22.2 per cent year-on-year but only experienced a 1.1 per cent increase since December 2022. Meanwhile, larger enterprises with 200+ employees grew in NET employee numbers by 29.2 per cent since January 2022 but only experienced 0.7 per cent growth month-on-month.
Ben Thompson, Founder and CEO of Employment Hero, said: “We have seen NET employee growth marginally rise since December 2022 at 0.1 per cent, while year-on-year SMEs experienced 7.6 per cent growth. Small enterprises with up to 19 employees have yet to recoup losses seen in December 2022, displaying no growth month-on-month. While marginal, medium and larger enterprises have shown some growth since December.
“Wages have increased by 1.6 per cent month-on-month, signaling the second month of consecutive growth after no change through October and November. Despite harsh economic conditions, we’re still in a candidate-driven market with more job postings but fewer qualified candidates.
“This could be driving up wages in key industries requiring specialised skill sets, such as Construction and Trade Services and Healthcare and Community Services, where the median wages grew by 8.6 per cent and 7.4 per cent, respectively, year-on-year.
“With insufficient supply in the market, this is a concern for SMEs unable to keep up with talent market conditions. As wages start to rise again, this is a big alert that we’re not out of the woods, and Australia could be in the middle of an upwards wage-price spiral. If we only look at the ABS’ Wage Price Index base data, we’re making decisions on incomplete data, and we’ll continue to see rate hikes from the RBA until we get this under control.”
The Employment Hero SME Index is available to download at https://employmenthero.com/sme-index/
