Average, full time salary growth at four-year low, failing to keep pace with inflation

Treasurer Jim Chalmers is claiming to be a champion of higher wages despite average salaries growing at the slowest pace in four years and lagging behind inflation.

Australia’s average, full-time pay before bonuses rose by 3.7 per cent in the year to May, which at the time was well below the 4 per cent inflation rate, meaning a 0.3 per cent cut in real wages with low-skilled workers in sectors like hospitality doing even worse.

This was also the slowest annual growth since 2022, but with women working full-time now earning six figures on average for the first time, Dr Chalmers instead focused on the gender pay gap in a joint statement with Finance Minister Katy Gallagher and Employment Minister Amanda Rishworth.

“Average weekly earnings are up and the gender pay gap is closing under Labor,” they said on Thursday.

“That means more money in people’s pockets since we came to Government and more money again since the beginning of the year.

“New data from the Australian Bureau of Statistics shows average weekly full-time earnings have now increased by more than $300 per week since the Albanese Government was elected.”

Nonetheless, pay levels for both men and women have been growing at levels lagging behind inflation, despite Labor introducing multi-employer bargaining during its first term so wage rises could be replicated across an industry.

The average, full-time female salary grew by 3.8 per cent to $100,594 as the equivalent male salary went up by 3.5 per cent to $113,412.

Australia’s average, full-time salary meanwhile went up by 3.7 per cent, to $108,352, marking the weakest annual growth since November 2022 during another period of high inflation and Reserve Bank interest rate rises.

Despite falling house prices, the average Australian professional would only typically be able to borrow $520,000 with a 20 per cent mortgage deposit to buy a $650,000 home, which would buy a median-price apartment in Melbourne but not a typical house in any capital city market with banks generally reluctant to lend someone five times their pay before tax.

With the Reserve Bank of Australia still hinting at another possible rate rise, given inflation is well above its 2-3 per cent target, Canstar insights director Sally Tindall said this year’s three rate rises were making it harder for the average-income earner to get a loan.

“For buyers, the bigger hurdle right now is passing the serviceability test as mortgage rates are at an average of 6.26 per cent for owner-occupiers, plus the three percentage point stress test,” she told The Nightly.

“That means borrowers need to demonstrate they could still afford their loan at a rate starting with a nine.”

With part-time wages mixed in too, the average salary grew by just 2.4 per cent to $82,118 meaning a 1.6 per cent cut in real wages for Australia’s lowest paid workers putting in fewer hours.

The annual growth was the weakest since May 2021 when Sydney and Melbourne were in COVID lockdown.

Australia’s lowest paid workers in the hospitality sector saw their wages rise by just 3.4 per cent to $78,515.

Public servants and government sector workers also had an underwhelming pay increase of 3.6 per cent to $113,350.

Mining was Australia’s highest paid industry with an average, full-time salary of $167,658 but the 1.6 per cent growth pace was particularly weak and coincided with iron ore prices falling below $US100 a tonne as the Productivity Commission explores reducing iron ore-dependent Western Australia’s share of the Commonwealth’s GST revenue redistribution.

Finance and insurance had an even weaker increase of 0.8 per cent to $121,748.

Some lower-paid roles had increases above inflation with full-time retail workers seeing a 5.1 per cent increase to $82,243.

Administration and support service roles had a healthy 7.2 per cent increase to $101,400, but health care and social assistance rose by 3 per cent to $105,934.