Wages are being outpaced by inflation, despite large sections of the workforce getting a pay bump.
Figures released on Wednesday by the Australian Bureau of Statistics for the December quarter showed seasonally adjusted wages rose 3.4 per cent for the year, up from 3.3 per cent.
Wages also rose by 0.8 per cent for the final three months of the year, keeping in line with the September quarter.
The wage rise is, however, below the 3.8 per cent inflation rate, which ticked up in the final months of 2025.
It’s the first time wage growth has been below the rate of inflation since September 2023.
The bureau’s head of price statistics Michelle Marquardt said the year to December showed a four per cent boost for public pay packets, compared to 3.4 per cent for those in the private sector.
‘Strong growth in public sector wages for 2025 was due to new state public sector agreements that delivered multiple pay rises over the course of the year,’ she said.
‘Multiple pay rises occurred when agreements included backdated increases that took effect soon after the agreement was finalised and a further scheduled rise was received later in the year.’
Wages are being outpaced by inflation, despite large sections of the workforce getting a pay bump
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The figures showed healthcare and social assistance industries were the main contributor to wages growth for the quarter.
The last quarter also coincided with pay rises for aged care workers across Australia, which came into effect from October.
The increase in salary was the final stage of wage rises for the sector following a case lodged by the Health Services Union to the Fair Work Commission at the end of 2022.
But the broad pay increases come against a backdrop of a rising number of businesses shutting their doors, with fresh figures showing the hospitality sector under more pressure than other industries.
CreditorWatch’s business risk index for January revealed 10.4 per cent of service businesses closed in the past year, double the economy-wide average.
Chief executive Patrick Coghlan said rising wages meant narrow margins for business owners were being squeezed.
‘Asset‑backed pubs and clubs are holding firm, but cafes and restaurants are operating on razor‑thin margins with very little room for error,’ he said.
‘When overdue invoices in food service are running at more than double the national average, that’s not cyclical noise – it’s sustained financial stress.’
The report said a rise in food prices of more than seven per cent in the past year was also a factor.
Economy-wide, there were 1366 insolvencies during December 2025, the third-highest monthly total recorded.
