Skill shortages forcing wages to rise

New data shows that skill shortages are forcing some businesses to increase wages, and workers in one industry have done better than the rest.

A lack of talent in the hiring pool for small to medium-sized businesses is finally having a flow-on effect to boost wage growth, new data suggests.

The Employment Hero SME Index for August – which uses an accumulative dataset of more than 120,000 small and medium-sized enterprises (SMEs) and over 1.1 million employees in Australia – has revealed talent shortages continue to slow the pace of employment growth month-on-month in Australia.

Workers for small and medium-sized businesses are seeing a higher increase in wages than the rest of Aussies. Picture: iStock

As a result, wages – which have barely been able to keep up with Australia’s rising inflation rate, let alone the ballooning cost of living – are finally starting to see some growth.

“You’ll always have inflation, but what we’ve gone through in the past two to three years is quite extraordinary,” explained recruitment specialist Roxanne Calder.

“In the first instance, when the pandemic started, real wages fell an average of 2.1 per cent. Then the consumer price index increased by 6.1 per cent. Since then, wages increases are sitting at around 2.4 per cent.

“That 6.1 per cent is a significant increase, so everyone is starting to feel the pressure.”

To put those numbers into the real world, Ms Calder explained that for people sitting on a base salary of $75,000, “that 6.1 per cent has potentially impacted your salary by around $75 to $80 a week”.

That’s $3900 to $4160 per year that is missing from your bank account.

What industries have benefited from wage rises?

But workers for many SMEs have found a little more relief.

Healthcare and community services employees benefited the most from wage growth. Picture: iStock

Year-on-year median wages increased overall by 8.6 per cent in August 2022, now sitting at an average hourly rate of $34.45 for Australian SME employees.

Employees aged 25 to 64 saw the most growth in their wages, with an 8.9 per cent increase since August 2021. The average hourly wage for this group now sits at $37.56.

As far as which state had the best median hourly rate, as of August this year, the Northern Territory came out on top, sitting at $37.51.

Employees in the healthcare and community services industries benefited the most from wage growth, seeing the biggest growth in median wages since July 2022. However, at just a 2.6 per cent increase, it’s still far from helpful with Australia’s rising cost of living.

The smallest increase in median wages was seen in science, information and communication Technology with just a 0.2 per cent increase.

Originally published as Skill shortages forcing wages to rise