Fewer workers are now receiving pay rises above 4%, hinting at a gradual easing in wage pressures
Australia’s wages grew by 0.8% in the December quarter, taking annual wage growth to 3.4% as strong public sector increases and pay rises in health and care industries underpinned the result.
The latest Wage Price Index (WPI) figures from the Australian Bureau of Statistics (ABS) for the December 2025 quarter, released today (18 February), show wage growth holding at the same quarterly pace as September but running slightly faster than a year ago, when wages rose 0.7% in the December 2024 quarter.
On an annual basis, wages growth has picked up from 3.2% in December 2024 and 3.3% in September 2025 to 3.4% in the year to December 2025.
Private and public sector both up 0.8%, but public sector running hotter annually
Seasonally adjusted wages across both the private and public sectors rose 0.8% over the quarter.
"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," said ABS head of prices statistics, Michelle Marquardt.
"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."
Over the year, private sector wages were up 3.4%, a modest acceleration from annual growth of 3.3% recorded in both September 2025 and December 2024.
The public sector continues to outpace the private sector on an annual basis. Public sector wages rose 4.0% through the year to December, up from 3.9% in September 2025 and well above the 2.8% annual growth recorded in December 2024. In original terms, public sector wages were up 0.9% over the quarter, compared with 0.7% in the private sector.
State government pay rises were the dominant driver of public sector wage gains, contributing 85% of public sector wage growth in the quarter.
More workers getting rises, but individual increases slightly smaller
The data show a greater share of jobs receiving pay rises compared with a year earlier, even though the size of the typical increase eased marginally.
Across all sectors, 21% of jobs recorded a wage change in the December 2025 quarter, up from 16% in December 2024. However, the average hourly wage change for jobs that did receive a rise was 3.5%, slightly below the 3.6% average a year earlier.
In the private sector, 19% of jobs saw a pay change, compared with 14% in December 2024, with the average increase steady at 3.7%. In the public sector, 29% of jobs recorded a wage change, up from 23% a year earlier, though the average rise eased to 3.1% from 3.3%.
The share of jobs experiencing large pay rises has been drifting lower. For jobs with a wage change over the previous 12 months, only 23% recorded an annualised increase above 4% in the December quarter, down from 28% a year earlier and continuing a decline each quarter since June 2024. It is the lowest share of jobs with wage increases above 4% since June 2022, when the proportion was 16%.
Individual deals drive growth, with aged care and childcare boosts lifting awards
Almost half of the overall wage growth in the December quarter came from jobs with pay set by individual arrangements, which contributed 48% of the increase.
Enterprise agreements remained a major driver, accounting for 43% of quarterly wage growth, in line with their contribution in December 2024.
Award-reliant workers played a larger role in this quarter’s result. Jobs with pay set by awards contributed 9% of quarterly wage growth, up from 3% in the December 2024 quarter. This was largely driven by Aged Care Work Value Case payments to aged care workers, state-based award rises in New South Wales and the Early Childhood Education and Care (ECEC) retention payment to childcare workers.
Health and care sector leads industry gains
By industry, the biggest contribution to quarterly wage growth came from Health care and social assistance, reflecting both the size of the sector and the scale of pay changes.
In original terms, Information, media and telecommunications recorded the strongest quarterly rise in wages at 1.2%. Administrative and support services and Accommodation and food services posted the weakest quarterly gains, each rising 0.3%.
Over the year, Health care and social assistance recorded the highest through-the-year increase at 4.4%, underscoring the sustained wage pressure in the care economy. At the other end of the spectrum, Financial and insurance services recorded the lowest annual wage growth at 2.7%.
Western Australia tops annual state growth, NSW leads quarterly pace
Wage growth was mixed across states and territories.
In original terms, New South Wales recorded the strongest quarterly wage growth at 1.0%, while the Australian Capital Territory posted the softest quarterly outcome at 0.3%.
Looking at annual growth, Western Australia led the nation with wages up 4.1% through the year. The Northern Territory recorded the weakest annual wage growth at 2.2%.
Wage growth steady but still moderate
Overall, the figures point to a wage environment where growth is holding at a steady pace, supported by public sector agreements, targeted increases in care-related industries and a higher share of workers receiving pay rises, but with fewer very large increases compared with a year ago.
With annual wage growth at 3.4% and public sector wages running at 4.0%, the data will be closely watched for what they signal about household incomes, inflation pressures and the outlook for interest rates in 2026.
