Under Australia's Labor government, workers are securing a larger portion of national income as strong demand for labour and regulatory changes push wages higher. However, this shift may place pressure on business margins.
Australia’s robust job market and a range of pro-worker policies are steadily shifting income toward employees. In the past year alone, workers earned about $28 billion more in wages, based on recent analysis, while business profits have declined. This has occurred alongside near-record low unemployment, solid wage rulings and enhanced workplace protections introduced during Labor’s time in office.
The labour share of national income has risen to 52.1%, up from a decade average of 51% before the pandemic. Contributing to this rise are consistent increases to minimum and award wages, including Fair Work Commission approvals of 5.75% in 2023 and 3.75% in 2024. Labor has also introduced workplace reforms such as greater access to permanent employment for casual workers and new standards for gig economy jobs.
However, wage growth carries trade-offs. Businesses, facing subdued post-pandemic demand, have struggled to pass higher costs on to consumers. Employer groups say policy-driven wage increases are straining company margins at a time of softer economic conditions.
This shift appears to signal a re-balancing. When excluding the mining sector, where profits can be more volatile, labour’s share of income has climbed even more sharply to 55%. While some businesses feel increased financial pressure, workers are beginning to recover after nearly a decade of stagnation. Real wages have risen for seven straight quarters, inflation is under control and tax cuts are being introduced.
