Australia’s annual pace of wage growth fell to 3.5 per cent in the year to September, from 4.1 per cent over the year to June.

A significant drop in the annual rate was anticipated as a staggering 5.75% increase in wages was left out.

Quarterly, the 0.8% increase in wages recorded by the Australian Bureau of Statistics was at the same pace as in the previous quarter and came in slightly below expectations.

While unchanged from the previous quarter, the 0.8% quarterly growth is down from the 1.3% peak recorded in the September quarter last year.

Michelle Marquardt, head of the Australian Bureau of Statistics, said wage growth for many jobs could be directly or indirectly linked to the outcome of the Industrial Arbiter’s annual pay decision.

“The latest decision to increase pay by 3.75% payable from 1 July 2024 was less than the 5.75% increase in the September 2023 quarter,” she said.

“It was also lower than the rise given by the commission for the September 2022 quarter of between 4.6% and 5.2%.”

Annual private sector wages rose 3.5% in the September quarter, and public sector wages rose 3.7%.

Wages have expanded strongly as demand for workers remains strong, but slower growth is expected as the economy weakens and the labor market weakens.

Some economists fear persistently strong wage growth without accompanying productivity growth may add to inflationary pressures and complicate the Reserve Bank of Australia’s fight against inflation.