Yahoo Finance Aussie wages vs cost of living: What we can expect for 2023
Pay rises aren't keeping pace with the rising cost of living, but will this trend continue next year?
Australians saw a boost to their wages in 2022 as widespread skills shortages drove up demand, but the rate of increase has declined according to new data. That's not good news at a time when inflation is still surging. But what can we expect for 2023? Are the tables about to turn?
The Australian Bureau of Statistics’ (ABS) Employee Earning report showed the average Aussie wage rose 4.2 per cent in the year to year to August, a slight drop from the 4.3 per cent rise over the previous 12 months.
Although wages have been rising consistently during the last two years, the problem for many is that pay rises are failing to keep pace with rampant inflation, which currently stands at 6.9 per cent.
With higher prices starting to impact consumer confidence, can Australians expect their earnings to keep pace with the growing cost of living in the next 12 months?
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Wages levelling out after COVID-19 turbulence
Yahoo Finance spoke with Nicholas Lee, ANZ CEO of leading recruitment firm Adecco, to get his view on whether the report reflected what his company was seeing in the local job market, and what Australians can expect for wages going into 2023.
“What we are seeing across the employment market is a levelling out of wages and job ads, after what has been a sporadic few years,” Lee said.
He highlighted how COVID-19 has produced unusual movements in the job market, resulting in extremes at both ends of the spectrum in recent times.
“We went from extreme job uncertainly during 2020 and 2021 as we moved through the pandemic, to increases in job ads and salary expectations to obtain top talent in the year after,” Lee said.
The skills shortages of 2022 have undoubtedly driven wages high in certain sectors over the last 12 months, but some professions have benefitted more than others.
Technology skills still in high demand
Given the rapid shift online that the pandemic accelerated in the last two years, it’s perhaps not surprising that technology jobs are seeing the biggest rise in earnings, Lee said.
“The tech industry is by far the biggest growth area, with many firms still searching for top talent and paying top dollar to secure this," he said.
However, it’s not just IT professionals that are benefitting from increased demand for workers, tradies and retail workers are also seeing higher wages.
“The construction and infrastructure sectors are still finding skill shortages across the board, and retail/hospitality is another area where we are still seeing [significant] demand for workers. We don’t see this slowing down over the months ahead,” Lee said.
With skills shortages set to continue in these sectors well into 2023, it’s likely that a continued demand for key skills will drive wages higher.
Stabilising wage growth for many, increases for some
Despite the projections of an economic slowdown by many commentators in the next twelve months, Lee is confident that wages will continue to grow, particularly for skills that are in short supply.
“While I do believe wage growth will stabilise in 2023 due to the economic landscape that we are starting to enter, sectors such as mining, tech and trades will still be looking for skilled talent and paying higher salaries to secure it," he said.
While that’s great news for Australians working in those industries, it’s unlikely to be replicated across the board.
The recent “Secure Work, Better Pay” legislation introduced by the Federal Government will seek to address this, but it is unlikely that its intended outcomes will filter throw to wage packets until the second half of 2023 at the earliest.
In the meantime, Australians will have to manage their finances carefully in the face of continued rising prices. Expecting higher wages to compensate for this will depend on your line of work, with technology, mining and construction workers most likely to have these expectations met.
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