Aussie wages rise 3.4% year on year

This morning (18 February), the Australian Bureau of Statistics (ABS) has found that the Wage Price Index (WPI) in the December quarter 2025 has risen, with the public sector staying ahead of the private sector in wage growth.

In the December quarter 2025, national WPI has increased 0.8 per cent quarter on quarter and 3.4 per cent year on year, with public sector wages growing at a faster pace than the private sector for four consecutive years.

The ABS found that public sector wage growth was up by 4 per cent in the year to December 2025, which is higher than it was at the same period the previous year (2.8 per cent).

Further, it revealed that private sector wages increased 3.4 per cent in the same period, also a higher figure than the same time the previous year (3.3 per cent).

The healthcare and social assistance industry had the highest wage growth quarter on quarter at 0.18 per cent, followed by the education and training industry (0.07 per cent) and the construction industry (0.06 per cent).

ABS head of prices statistics Michelle Marquardt said: “Quarterly wage growth of 0.8 per cent was in line with the September quarter 2025. Annual growth in wages was 3.4 per cent, up from 3.3 per cent in [the] September quarter 2025.”

“Strong growth in public sector wages for 2025 was due to new state public sector agreements that delivered multiple pay rises over the course of the year.”

“Multiple pay rises occurred when agreements included backdated increases that took effect soon after the agreement was finalised, and a further scheduled rise was received later in the year.”

Employment Hero chief executive and co-founder Ben Thompson noted that the latest Employment Hero data shows wage growth is stronger in the SMB sector, representing 99 per cent of Aussie businesses.

“Across the hundreds of thousands of small and medium businesses on the Employment Hero platform, wages are up 5.3 per cent year on year,” Thompson said.

“Small businesses are paying more because they have to. They’re competing for talent against larger employers with deeper pockets and in a labour market that’s still tight in pockets like manufacturing, science, and technology.”

Thompson added that the data also found that workers aged 55 and over had the biggest wage gains at 5.9 per cent year on year, revealing that experience and judgement command a premium.

“At the same time, record numbers of young people entering the workforce are easing pressure on starting salaries,” Thompson said.

“Coming off this month’s rate rise to 3.85 per cent, today’s number puts employers in an increasingly difficult position. Wages are growing faster than official figures suggest, costs are rising, and the RBA is signalling rates will stay higher for longer.”