Since the onset of COVID-19, Australian wages have gone through a period of marked turbulence, but recent data suggests a surprisingly strong rebound. When the pandemic struck in early 2020, according to Deloitte, wage growth slowed noticeably with businesses cutting back, bonus payments deferred, staff hours reduced and many firms froze or delayed pay rises. Forecasts at the time predicted a sluggish recovery, partly because firms were focused on preserving cash and navigating uncertainty.
Recovery and acceleration through 2022–2023
As the economy reopened and labour markets tightened, wages began to rebound. According to the Australian Bureau of Statistics (ABS), the Wage Price Index (WPI) grew by 4.2% over the year to December 2023, the strongest underlying wage growth since 2009. Average weekly earnings for full-time workers also saw sharp rises: in November 2023, ordinary-time earnings reached about $1,889 per week, up roughly $81 from the previous year.
Part of this surge reflected not just higher wage rates, but also more hours worked, for example, enterprise bargaining agreements in sectors like health, education, and aged care helped drive earnings higher.
Real-wage dynamics and inflation
However, inflation played a key role in shaping how much that wage growth really translated into higher living standards. Between mid-2021 and late 2022, inflation peaked at about 7.8%, significantly eroding purchasing power. During that time, real wages (i.e., wages adjusted for inflation) actually declined.
But as inflation began to moderate in 2024, real-wage growth rebounded. By November 2024, real average weekly ordinary-time earnings had recovered somewhat, and the real Wage Price Index showed modest gains. The Australian Council of Trade Unions (ACTU) noted that in one quarter of 2024, real wages rose 0.6%, owing to strong nominal wage growth combined with low quarterly inflation (Australian Council of Trade Unions).
Recent trends and some cooling
By March 2025, the WPI annual growth stood at 3.4%, after a solid quarterly rise of 0.9%. That pace held into June 2025, but it marked a slowdown compared to the 4% plus increases seen in 2023. According to economic reporting, the moderation in wage growth by the end of 2024 (3.2% for the December quarter) aligned with broader monetary policy easing by the Reserve Bank.
Above is a simple chart and table showing Australia’s annual Wage Price Index (WPI) growth from 2019–2025 using Australian Bureau of Statistics Wage Price Index annual growth rates.
Quick takeaways
The post-COVID period in Australia saw a sharper-than-expected rise in nominal wages (peak 4.2% in 2023), but real depended on inflation.
Since late-2024/early-2025, wage growth has moderated to the low-to-mid 3% range, while real wages have been positive as inflation fell — a healthier balance than 2022’s squeeze.
Compared with OECD peers, Australia’s experience is broadly similar: a COVID dip, a nominal rebound during tight labour markets, and then real-wage recovery as inflation cooled (OECD).
What It All Means
In short, Australian wages have rebounded strongly from the early COVID shock. Nominal pay growth has surged, especially during 2022–23, supported by tight labour markets and negotiated wage rises, but the squeeze from high inflation tempered real wage gains for a while. More recently, as price pressures have eased, real wages have begun to recover, although wage growth is now moderating again. For many workers, the post-COVID period has been a mixed bag: higher pay, yes, but not always enough to fully offset cost-of-living pressures.