Wage growth steadies as businesses navigate economic challenges

By Newsdesk

November 19 2025
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In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers continue to grapple with higher labour costs, legislative complexities, and inflationary pressures.

Wage growth steadies as businesses navigate economic challenges

Ben Thompson, CEO and co-founder of Employment Hero, highlighted the current state of wage growth, saying, "Wage growth holding steady this quarter suggests the market is finding its balance. Employers have absorbed higher labour costs with the median total hourly rate hitting $45.20, and are now managing pay rises more carefully." Despite this apparent stability, a closer look at year-on-year trends reveals a more nuanced picture.

Employment Hero's comprehensive analysis, drawing on data from over 300,000 small and medium-sized enterprises (SMEs), indicates that median pay increased by 4.8% year-on-year in October. However, this figure marks a slight decline from the previous year's growth rate of 5%. Thompson noted, "It’s a notable dip, but it’s by no fault of businesses. Employers are still doing what they can to stay competitive amid inflationary pressures."

The data underscores the complex challenges faced by businesses as they navigate the current economic landscape. Employers are striving to remain competitive, yet they are hampered by a myriad of factors, including inflation, compliance costs, and regulatory hurdles. Thompson elaborated on these challenges, stating, "Layers of legislation and increasing cost of compliance mean it’s never been a more expensive or confusing time to be an employer."

Amid these pressures, businesses are not retreating, but they are feeling constrained. Thompson observed, "Businesses aren’t pulling back, but they are feeling restricted and doing what they can to keep their employees and their business above water." This sentiment reflects the broader economic environment, where companies are attempting to balance the need to offer competitive wages with the financial realities imposed by external factors.

The current wage growth trend, while steady, raises questions about the sustainability of this balance. As businesses continue to face inflationary pressures, the cost of compliance, and other economic challenges, the ability to maintain competitive wage growth without sacrificing profitability remains a critical concern.

In this context, the role of government policy and regulatory frameworks becomes increasingly significant. Employers are calling for clearer guidelines and support to navigate the complexities of compliance and legislation. The interplay between government action and business response will likely shape the trajectory of wage growth in the coming months.

The stabilisation of wage growth also has implications for the broader economy. As wages level out, consumer spending patterns may shift, impacting sectors reliant on discretionary spending. This potential shift underscores the interconnected nature of wage dynamics and economic health.

In summary, while the stabilisation of wage growth offers a glimmer of balance in the labour market, it also highlights the ongoing challenges faced by employers. The ability to navigate these challenges while maintaining competitive wages will be crucial for businesses aiming to thrive in a complex economic environment. As the landscape continues to evolve, the interplay between wage growth, regulatory factors, and economic pressures will remain a focal point for both employers and policymakers.

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