In a positive development for Australian workers, the Wage Price Index (WPI) indicates an annual pay increase of 4.2% in 2023. This marks the first time in almost three years that real wages have risen. The increase was driven by a quarterly rise of 0.9% in the December quarter.
Notably, the annual wage growth surpassed inflation, which reached 4.1% for the year to December. The last time annual wages outpaced inflation was in March 2021. The 4.2% annual wage growth is the highest recorded since March 2009, when it also stood at 4.2%.
The public sector significantly contributed to the economy-wide pay increase. Public sector workers experienced their highest quarterly pay rise in 15 years, primarily due to changes in state-based wages policies and new enterprise agreements for essential workers in healthcare, social assistance, education, and training.
However, there are differing views on the implications of the wage growth. While Treasurer Jim Chalmers hailed the numbers as encouraging and attributed them to a departure from the previous government's alleged wage suppression, the opposition expressed concerns. They argued that living standards have declined under the current government and highlighted worries that recent industrial relations law changes could undermine long-term wage growth and employment.