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Payroll data has revealed a marked slowdown in rises, Employment Hero says, as it urges restraint on the central bank.
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Wage slowdown ‘should prompt RBA pause’
04 December 2023
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Wage growth has flattened and should prompt a pause by the RBA on rates tomorrow, says payroll platform Employment Hero.
Its October SME Index, which gathered data from 150,000 businesses and 1.5 million employees, revealed a slowdown in wages and hiring rates that marked a “potential turning point in the nation's economic trajectory”, CEO Ben Thompson said.
“The RBA’s recent fears of a wage-price spiral were previously indicated in our June index, something we could identify due to the real-time granularity of our data,” he said.
“However, our latest October data now reflects the critical alignment of wage growth with inflation. We would strongly encourage the RBA to hold tight on further interest rate increases.”
“As we expect this plateauing wage trend to continue in 2024, Australian businesses and workers should receive a breather over the holiday season if the Reserve Bank pays attention to the data and pauses rate rises in at least the short term.”
The October index revealed an increase of just 0.5 per cent in the monthly median hourly rate, down from 2.8 per cent a few months earlier in the latest quarter.
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Average employee growth also dropped month on month to 0.1 per cent, for a quarterly change of 0.8 per cent.
Other trends revealed by the October index included a surge in healthcare hiring and the return to employment of older workers.
The healthcare and community services sector recorded a 1.2 per cent quarterly increase in average employee growth and an 8.8 per cent increase year on year, outpacing other key industries from construction to hospitality.
“This trend aligns with expectations of a seasonal Covid outbreak, with recent NSW health data detecting Covid cases in NSW soaring more than 20 per cent in the past fortnight amid a national spike in vaccination rates,” Employment Hero said.
Healthcare also saw the biggest increase in the median hourly rate of all industries, rising 1.3 per cent month on month and 8 per cent for the year.
Employment Hero said one surprising trend was the rate at which older workers had returned to the workforce over the past year. The 65-plus age group experienced an 8.6 per cent increase in the median hourly wage rate compared to October 2022.
“This increase surpasses that of other age groups, including under 18-year-olds at 8 per cent, 18-24-year-olds at 6.5 per cent, and 25-65-year-olds at 7.3 per cent,” it said.
“The data suggests that cost-of-living pressures may be a driving factor for this demographic's return to work, particularly now in the lead-up to Christmas.”
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