Pay rises in Australia are expected to be less than inflation in 2025, according to a new report by the Australian HR Institute (AHRI).
The mean basic pay increase is projected to be 2.7% for the 12 months to October 2025, based on employers’ responses. This is down from the previous quarter's 3.8%, and the lowest expected pay rise figure in AHRI’s quarterly surveys this year.
“With CPI inflation at 2.8% in the 12 months to September, many employers will not be offering inflation-matching pay increases to workers who are struggling to cope with rising living costs,” said AHRI’s CEO Sarah McCann-Bartlett. “This could represent an engagement challenge for line managers and HR practitioners.”
The mean pay increase is set to be higher in the public sector at 3.3%, with the private sector’s figure at 2.5%.
The main factor driving employee stress is the cost of living, reported by 42% of organisations, along with excessive workloads at 32% and poor work-life balance at 28%.
The report also notes that 47% of organisations plan to increase staff levels in this year’s fourth quarter, and 67% aim to hire staff in Q4.
25% of employers expect to make redundancies this quarter, down from 27% in Q3.
30% of organisations said they were experiencing difficulties recruiting, a significant drop from 39% in the previous quarter.
The 12-month average employee turnover to the end of June 2024 was 16%, up slightly from last quarter’s 15%.