New data out today shows the effect that state government wage agreements are having on the Australian labour market.
Data from the Australian Bureau of Statistics shows wages growth rose to 3.4% p.a. in the first quarter of 2025. With private sector wages steady, the rise was wholly driven by the public sector which saw wages growth leap from 2.9% to 3.6% p.a. in a single quarter.
New government agreements for public sector employees in Victoria, New South Wales and Western Australia were responsible for much of the increase. Public sector wages are now rising faster than those in the private sector, for the first time in four years.
"Public sector wage agreements have become increasingly out of touch with the realities of the Australian economy," said Innes Willox, Chief Executive of national employer association the Australian Industry Group.
"Last year, Australia suffered through its worst year of economic performance since the recession of the early 1990s. While private sector wages are moderating to reflect this economic reality, public sector agreements continue to rise.
"Pressure from excessive state government wage deals puts further pressure on Australian private sector employers, who are already struggling with weak market conditions and declining profitability.
"With the fiscal position of the federal and many state government budgets already in serious question, these on-going taxpayer-funded agreements are simply not sustainable," Mr Willox said.
