Spotlight on wages as jobs market loses heat

After several months of robust pay bumps, wage growth has likely passed its peak, slowed by a softening jobs market.

The June quarter wage price index from the Australian Bureau of Statistics, due on Tuesday, is expected to stay elevated though tapering a little on an annual basis.

In March, the wage price index rose 4.1 per cent annually, down from 4.2 per cent in December 2023.

Financial market economists expect a further weakening in the year to the end of June, with ANZ pointing to a rise of four per cent.

But on a quarterly basis, the bank’s economic team are tipping a 0.9 per cent rise, up from 0.8 per cent in the March quarter, to reflect seasonal factors as well as a pick up in newly-approved enterprise bargaining agreements.

The bureau’s wage price index, which tracks changes in the hourly rate of pay for a fixed group of jobs, will indicate the pace of underlying price pressures in the labour market at a critical point in the central bank’s price fight.

Last week, the Reserve Bank of Australia kept interest rates on hold and warned inflation was still high.

Fresh surveying of human resources professionals has painted a mixed picture of the labour market, with employment intentions strong and on the rise - particularly in the public sector.

At the same time, more firms expected to make redundancies, according to the Australian HR Institute’s quarterly outlook report.

Among employers, 27 per cent said they planned to make redundancies, up from 23 per cent in the previous quarter.

AHRI chief executive Sarah McCann-Bartlett said the figures may be driven by restructuring rather than job cuts as organisations pursued automation and AI to eke out productivity gains.

“The redundancy figures could therefore be about restructuring and preparing for the future rather than cost savings,” she said.

Looking at the data, she expected incremental changes to the composition of the workforce over time, leading to better quality jobs and a net increase in employment levels.

The survey showed employers also planned to hand out bigger bumps to basic pay in the 12 months to July - rises of 3.8 per cent compared to three per cent in the year to April.