Overview
The Albanese government has repeatedly pointed to wage growth as evidence that its economic management is working. The Wage Price Index has risen. Minimum wages have been increased. The government calls this a win for workers.
The problem is that wages are only meaningful in real terms — that is, after accounting for inflation. And when you run the numbers, the picture is considerably less flattering. For most of Labor's term in office, inflation has outpaced wage growth, leaving Australian workers with less purchasing power than they had before the 2022 election.
The data
The Australian Bureau of Statistics publishes two key measures: the Wage Price Index (WPI), which tracks changes in the price of labour, and the Consumer Price Index (CPI), which tracks changes in the cost of goods and services. Real wage growth is simply WPI minus CPI.
The table below shows annual WPI growth, CPI inflation, and the resulting real wage change for each financial year since 2019–20. The figures are drawn directly from ABS releases.
| Financial year | Nominal WPI | CPI inflation | Real wage change |
|---|---|---|---|
| 2019–20 | +2.4% | +1.7% | +0.7% |
| 2020–21 | +1.5% | +1.1% | +0.4% |
| 2021–22 | +2.6% | +5.1% | −2.5% |
| 2022–23 | +3.7% | +7.0% | −3.3% |
| 2023–24 | +4.2% | +4.1% | +0.1% |
| 2024–25 | +3.5% | +3.8% | −0.3% |
The pattern is clear. In the two years before Labor took office, real wages were positive — modest, but positive. In Labor's first two full financial years in office (2021–22 and 2022–23), real wages fell sharply: −2.5% and −3.3% respectively. The cumulative loss over those two years alone was approximately 5.8%.
The 2023–24 figure shows a near-recovery to flat (+0.1%), but 2024–25 has slipped back into negative territory (−0.3%). Workers have not recovered the ground they lost. They are simply losing it more slowly.
Why it matters
A real wage decline of 3–4% over three years might sound abstract. In practice, it means a worker earning $80,000 in 2022 has the equivalent purchasing power of roughly $77,400 today — despite their nominal pay potentially rising to $85,000 or more. They are earning more dollars. Those dollars buy less.
This is not a minor statistical footnote. It is the lived experience of millions of Australians who are working harder, earning nominally more, and finding themselves further behind on groceries, rent, energy bills, and mortgage repayments.
The impact is not evenly distributed. Workers in industries with weaker bargaining power — hospitality, retail, aged care, early childhood education — have seen the smallest nominal wage gains and therefore the largest real wage losses. These are disproportionately women, casual workers, and people in regional areas.
Labor's response
The government's standard response to questions about real wages is to point to the Fair Work Commission's minimum wage decisions. In 2022–23 and 2023–24, the FWC awarded above-average increases to minimum and award wages — 5.2% and 3.75% respectively.
This is true, but it is a selective reading of the data. Minimum and award wage workers represent approximately 20–25% of the workforce. The WPI — which covers all employees — tells a different story. And even for minimum wage workers, the 5.2% increase in 2022–23 came against a CPI of 7.0%, meaning they still went backwards in real terms.
The government also points to the Stage 3 tax cuts, which were restructured in 2024 to provide larger benefits to lower and middle income earners. These cuts do increase take-home pay — but they are a one-off structural change, not a sustained improvement in real wages. They do not change the underlying trajectory of the WPI relative to CPI.
Treasurer Jim Chalmers has described the current period as a "wages breakout." The data does not support this characterisation. A wages breakout would require sustained real wage growth — wages rising faster than prices over multiple consecutive quarters. That has not occurred.
What needs to change
Restoring real wages requires either faster nominal wage growth, lower inflation, or both. The government has limited direct control over either — but its policy choices have consequences.
On the inflation side, the government's continued expansion of public spending has contributed to demand-side inflationary pressure. The RBA has noted this explicitly. Fiscal consolidation — reducing the rate of government spending growth — would assist in bringing inflation down faster, which would in turn improve real wages without requiring nominal wage growth to accelerate.
On the wages side, the government's approach to enterprise bargaining has been to encourage multi-employer agreements and expand union coverage. The evidence that this approach produces better real wage outcomes for workers — as opposed to better nominal outcomes that are then eroded by inflation — is not yet clear.
What is clear is that the government's current framing — "wages are rising" — is misleading without the inflation context. Australians deserve an honest account of where they stand. The data is publicly available. The government chooses not to lead with it.