Australia’s SMB wage growth cooling overall, but 18–24 year-olds are the only age group gaining jobs in June, says latest Employment Hero analysis
Here’s something that might catch you off-guard if you’re running a small business in Australia right now: your 18–24 year-old staff have just become your most expensive hire, at least in percentage terms.
New data from Employment Hero shows workers aged 18–24 recorded the strongest wage growth nationally in June. Their earnings rose 7.6% year-on-year, well ahead of every other age group. They’re also the only age cohort recording employment gains month-on-month. This signals something important: younger Australians are in demand, and businesses are competing for them.
Many employers likely moved to lift younger workers’ pay before Australia’s mandatory minimum wage increase kicked in on July 1. But the data suggests something deeper is at play. This age group is emerging as genuinely difficult to retain without investing in better pay.
James Keene, Managing Director of Employment Hero APAC, explains what the payroll data is showing. “June’s results suggest Australia’s SMB labour market remains resilient, although hiring momentum has softened following a strong May,” he says. “One of the standout findings this month was the continued strength of younger workers. Employees aged 18–24 were the only age group to record employment growth in June and also led the nation in annual wage growth, underscoring the important contribution younger Australians are making to workforce growth across the SMB economy.”
The data comes from aggregated payroll information covering more than 23,000 businesses and 1.7 million employees.
Overall growth is softening
The broader picture tells a different story though. Across Australia’s SMB sector, wage growth is cooling after a strong start to 2026.
Monthly wages increased 0.5% in June, which sounds modest but actually represents a recovery from May’s 1.6% dip. More tellingly, annual wage growth has eased to 4.3% from 5.6% at the start of the year. Translation: pay rises are returning to a more sustainable pace, which is probably good news if you’re budgeting for the months ahead.
Employment itself has tightened slightly. SMBs saw a marginal 0.1% decline in month-on-month employment following May’s stronger 1.2% increase. The fluctuations month-to-month are normal, but the pattern is worth noting. Many businesses are taking a more cautious approach to hiring and costs right now.
What’s shifting for your business
If you’re managing payroll, you’re probably feeling this tension already. On one hand, younger workers are commanding higher wages and becoming harder to retain without investing in pay rises. On the other, overall hiring momentum is softening, suggesting many SMBs are being more selective about headcount.
Keene expects this trend to continue. “With last month’s ABS labour force figures indicating positive employment growth, next week we expect that results will remain broadly steady, led by younger workers entering Australia’s SMB workforce.”
What does that mean practically? If you’re planning your labour costs for the next quarter, younger workers are likely to remain competitive in the job market. They’re in shorter supply relative to demand, especially for entry-level and growth roles. Retaining them might mean budgeting for bigger pay rises than you’d offer to older cohorts.
At the same time, the broader slowdown in wage growth suggests many SMBs are tightening their belts. That’s a signal worth taking seriously: businesses aren’t hiring aggressively, and they’re being thoughtful about overall cost pressures.
Budget for the shift
Here’s the practical takeaway: you need to distinguish between sector-wide trends and your specific labour market. Younger workers are winning bigger pay packets right now, and that’s unlikely to reverse soon. But the cooling in overall SMB wage growth means you should be strategic, not reactive, about hiring and pay decisions.
Monitor your own turnover among younger staff. If you’re losing people to competitors offering better pay, you might need to adjust. But if you’ve got reasonable retention, the slower overall wage growth environment might give you some breathing room on costs. Either way, the data from 1.7 million employees across Australia suggests the labour market is normalising after a hot stretch. That’s worth factoring into your planning.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
