The labour market has delivered SMEs a dose of predictability as wage growth holds steady, but relentless red tape is creating some pressure points.

New ABS figures show the Wage Price Index (WPI) rose 0.8 per cent in the September quarter and 3.4 per cent over the year, highlighting a phase of controlled wage growth. Private-sector wages were up 0.7 per cent and public-sector wages 0.9 per cent, indicating predictable increases rather than any fresh surge. Only 47 per cent of private-sector jobs recorded a wage change this quarter – down from 49 per cent a year earlier – underscoring a more settled wage landscape.

Wage Pressure Eases Into Manageable Territory

Employment Hero CEO Ben Thompson says employers are taking a measured approach. “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.”

Industry data shows wage rises remain moderate across most sectors, with some exceptions: health care and social assistance posted the strongest quarterly increase at 1.5 per cent, driven by award and enterprise agreement updates, while retail (0.7 per cent) and accommodation and food services (0.6 per cent) saw softer moves.

Hiring Stabilises as Retention Strengthens

A cooling labour market is giving employers more breathing room. Private-sector annual wage growth of 3.2 per cent suggests fewer bidding wars and more predictable wage-setting as businesses retain staff without spiralling costs.

But workers themselves still appear under pressure. Says Ben Thompson: “Employment Hero’s latest platform data from more than 300,000 SMEs shows median pay was up 4.8% YoY in October, but in 2024, wages were up 5%. It’s a notable dip, but it’s by no fault of businesses.”

Thompson says regulatory complexity continues to weigh heavily on employers: “Layers of legislation and the increasing cost of compliance mean it’s never been a more expensive or confusing time to be an employer. Businesses aren’t pulling back, but they are feeling restricted and doing what they can to keep their employees and their business above water.”

Structural Shifts Open New Doors for SMEs

The gap between public-sector (3.8 per cent) and private-sector wage growth remains significant. While stronger public-sector wages may make government roles more appealing, a steadier private-sector labour market – with more predictable wage expectations – is helping talent circulate rather than churn rapidly.At the same time, stable wage growth is putting productivity back on the agenda. SMEs – which can adopt automation, workflow improvements and efficiency tools more rapidly than large organisations are best-placed to benefit from this next phase in the labour market.