Employment Hero data suggests ‘wageflation’ in Australia

Wages are exploding across Australia, but there’s a downside to the money bump.

Aussie businesses are buckling under sharp wages growth that threatens to tip more employers and employees into unemployment.

HR and payroll platform Employment Hero reports overall year-on-year wage growth hit 8.8 per cent in July, more than double the wage price index growth figure of 4.1 per cent recorded by the Australian Bureau of Statistics in May.

NSW recorded the biggest jump in wages with a 9.9 per cent year-on-year increase, the company said.

The median hourly rate in the state now sits at $44.30.

Queensland and the Northern Territory follow, with both states reporting a 9.4 per cent jump for hourly rates of $41.80 and $40.60, respectively.

At an industry level, wages in construction and trade services exploded 18 per cent across the year, followed by consulting and strategy with a 14 per cent rise and real estate and property with a 13.2 per cent bump.

Australian full-time, part-time and casual workers have all enjoyed a boom in wages, according to new data from Employment Hero. Picture: NewsWire / Max Mason-Hubers

Full-time workers collected the largest growth rate at 9.6 per cent, while part-time workers enjoyed a six per cent bump and casuals saw a 5.9 increase to their paypackets.

Workers aged 45-54 recorded a 12 per cent increase in wages for a median hourly rate of $50.60, the largest increase across age groups.

The figures far exceed Australia’s inflation rate, which is running below four per cent, and employers are buckling under the cost pressure.

ASIC’s annual insolvency report, released in July, recorded 11,049 insolvencies in 2023-24, a 39 per cent increase in insolvencies compared with 2022-23.

The figure is the highest since the peaks of 2011 and 2012-13, though the proportion of business busts are lower because there are now 3.4 million businesses in Australia compared with the two million recorded in 2011-2013, the watchdog said.

“The current ratio of companies entering external administration compared to the number registered (was) 0.33 per cent, still below the 2012-2013 (level of) 0.53 per cent,” ASIC noted.

Adelaide cafe owner Michael Beech said wages growth had contributed to a “really tough” year for his business.

“The issue is, we have lots of casuals in our cafe and the last two years, the casual wages have gone up three times and besides then you’ve got the situation with food,” he said.

Employment Hero CEO Ben Thompson has warned of ‘wageflation’ in Australia. Picture: Supplied

“I’ve gone from 30 per cent of my food I used to make, now I’m making 75 per cent of my food because to buy it in, the cost is just way too high.”

Employment Hero CEO Ben Thompson said Australia’s “wageflation” potentially undermined the Reserve Bank of Australia’s battle against inflation.

“The ongoing ‘wageflation’ that our 8.8 per cent wage increase reveals is an important metric that must be considered by decision makers, especially when viewed in the context of the RBA’s ongoing battle against inflation,” he said.

“The impacts of potentially unsustainable wage growth must also be weighed against ASIC’s findings that business failure rates are nearing recession levels.”

Employment Hero’s numbers are drawn from payroll data from nearly 400,000 unique active Australian employees.

Originally published as Employment Hero data suggests ‘wageflation’ in Australia