Today’s Australian Bureau of Statistics Labour Force Survey release shows that the Australian jobs market remains on a very healthy footing. Other than a hiccup in February 2025 – that saw employment fall by more than 56,300 workers – job gains have broadly been uninterrupted for the past 12 months. In the month of April alone 89,000 people gained employment - the largest monthly gain since early 2024. In the past year 389,800 people have found jobs, with around two-thirds of these being full-time positions.

The unemployment rate remains steady at 4.1%, well below the pre-pandemic average of 5.2%. Additionally, the participation rate sits at 67.1%, a near record high, and the underemployment rate has been broadly trending downward since the end of 2023 (particularly among early career workers) indicating minimal spare capacity in the labour market. The overall strength of the labour market masks some two track trends – we know that non-market sector employment has been growing strongly, while market sector employment growth has been more subdued.

Overall wage growth is more moderate, but has started to rise again. The annual Wage Price Index increased for the first time since June 2024, with a 0.9% wage increase in the quarter, contributing to an annual 3.4% wage growth rate. Wage growth has been led by the public sector (3.6% annually) as new state-based enterprise agreements come into effect alongside higher rates of pay for aged care workers. Private sector wage growth remained steady at 3.3% annually while jobs covered by individual arrangements had its lowest contribution to total quarterly wage growth since early 2022.

Chart 1: Australian wage growth by sector

Wage growth is expected to stabilise around current rates in the near term as several large public sector enterprise agreements and award decisions come into effect over the next year. The gradual recovery in economic activity is likely to provide support to private sector wages in the second half of 2025. Businesses are expected to shift their mindset from tightly controlling overheads to investing in expanded capacity and new opportunities as Australia’s economic growth recovers.

Maintaining wage growth has been nominated as a top priority for the recently re-elected Labor government. The government intends to support this objective in part through keeping penalty rates for award staff, banning non-compete clauses for low to medium income workers to promote job switching, and other tweaks to industrial relations policy. This sits alongside the Fair Work Commission’s adjustments to wages for historically undervalued occupations (including aged care and health care workers).

Wage growth is good for workers, but it can flow through to higher prices and become unsustainable if productivity growth doesn’t keep up. The sustainable way to maintain healthy wage growth is through productivity gains – something the Treasurer has recently nominated as being central to the Labor government's second term.

The latest wage growth figures could be consistent with keeping inflation in the Reserve Bank’s target band, if productivity growth were playing its part. But since its peak in March 2022, Australia’s labour productivity has fallen by 5.7% and labour productivity in the non-market sector now sits at a near 20-year low. This is a big reason why stoking productivity growth should indeed be a top agenda item for the government. 

This newsletter was distributed on 15^th May 2025. For any questions/comments on this week's newsletter, please contact our authors: 

This blog was co-authored by Hamish Burrell, Senior Economist at Deloitte Access Economics

Click on the links below to read our previous Weekly Economic Briefings:

• Three more years (07 May)

• Underlying inflation returns to the Reserve Bank’s target range (30 April)

  DAE Business Outlook: A new order of the ages (24 April)

• Global dynamics; State implications (15 April)