Australian workers' prospects for stronger real wage growth this financial year have been bolstered by a significant rise in employers' pay expectations according to the latest survey from the Australian HR Institute (AHRI).

AHRI’s September Quarterly Work Outlook report shows that employers expect the mean basic pay increase (excluding bonuses) to be 3.8% in the 12 months to July 2025, an increase from the 3% previously predicted for the 12 months to April 2025.

This is the highest figure for wage intentions recorded in any of our six Australian Work Outlook surveys published to date. With the RBA forecasting that CPI inflation will fall to 2.8% by June 2025*, the data offers hope for workers of a stronger, sustained increase in real wages this financial year.

The report, which surveyed 600+ senior HR professionals and decision-makers, also found that while there has been an increase in the percentage of employers planning to make redundancies this quarter (from 23% to 27%) recruitment intentions have remained high at 68% - reflecting a strong and balanced overall employment outlook.

There were significant differences in redundancy intentions between sectors, with 60% of public sector employers anticipating job cuts in the September quarter—up from 31% in the June quarter—while redundancy intentions in the private sector remain unchanged at 21%.

Recruitment intentions were also considerably higher in the public sector (88%) than the private sector (62%).

AHRI CEO Sarah McCann-Bartlett said the figures could be more about restructuring than job cuts.

“This is potentially about the different skills that are needed as more organisations embrace digitisation, automation and AI in pursuit of higher productivity and growth. The redundancy figures could therefore be about restructuring and preparing for the future rather than cost savings. These incremental changes will have an ongoing impact on the composition of the workforce, including higher quality jobs in Australian workplaces. Indeed, the survey data suggests that the net effect of this activity will be to increase employment levels, mirroring the trends in the official data.

Other key findings include:

• Ongoing recruitment difficulties: The share of organisations experiencing recruitment difficulties has remained flat at 39% in the September quarter, around the same level as in the June quarter (40%).

• Staff expansion: 45% of organisations are intending to increase staff levels, compared to only 3% anticipating workforce reductions.

• Employee turnover: The average employee turnover for the 12 months to the end of June 2024 was 15%, unchanged from the previous quarter. Employee turnover was higher in the public sector (19%) than in the private sector (15%).

McCann-Bartlett said the findings highlight the ongoing tightness in the Australian labour market, despite a slight cooling of some key labour market indicators. This has significant implications for HR professionals who might expect an imminent easing of recruitment and retention pressures, underscoring the need for employers to engage, reward and retain employees.

She emphasised the difficulty in finding people with the right skills and noted that as roles and responsibilities continue to evolve, organisations need to invest in skill development to overcome workforce gaps; especially for those in roles that are most at risk of displacement.

“My message to employees is that they should be advocating for upskilling within their organisations while job seekers should be focused on acquiring in-demand skills.”

“HR professionals are in an unusual situation where they are having to manage the 4Rs - managing recruitment, redundancies, retention and reorganisation at the same time. While this may seem paradoxical, it reflects the increasingly complex ways employers are changing the composition of their workforce through digitisation, automation and AI. To reap the productivity benefits of these changes to technology, HR professionals also need to adopt a systematic approach to consulting, involving and training across the entire workforce.”

*About the AHRI Net Employment Intentions Balance Index

The AHRI Net Employment Intentions Index is calculated by taking the percentage of employers intending to increase staffing levels and subtracting the percentage of employers intending to decrease staffing levels:

• An index of +100 would mean that all organisations intend to increase staffing levels

• An index of -100 would mean that all organisations intend to decrease staffing levels

• A 0 index could mean that either all organisations expect no change in employment levels, or that 50% of employers intend to increase staffing levels while the other 50% intend to decrease staffing levels

About the report

AHRI’s Quarterly Australian Work Outlook is a quarterly survey report of employers that offers an early indication of future changes to the Australian labour market, including: net employment balance, recruitment and redundancy intentions for the next three months, current labour turnover rates and wage growth for the year ahead.

For this report, market research firm YouGov surveyed 609 senior business decision makers across all Australian states and territories, between 1-11 July 2024.