Australian wages grow at fastest pace since 2009

Wages grew at their fastest pace since 2009 at an annualised 4.2 percent in the December quarter, according to the Australian Bureau of Statistics (ABS). This is the first time that wages have grown faster than inflation since 2021. Newly implemented enterprise agreements for essential workers drove public sector wages growth to its highest quarterly rate in 15 years at 1.3 percent. Private sector wages growth came in at 0.9 percent, mainly due to annual salary reviews at companies.

Michelle Marquardt, ABS head of prices statistics, said: “In the December quarter 2023, 38 percent of public sector jobs saw a wage rise, considerably higher than the 29 percent from the same quarter in the previous year. The average hourly wage change for these jobs has lifted to 4.3 percent, higher than 2.8 percent at the same time last year and the highest recorded since September 2008.”

CBA economist Belinda Allen commented that rising unemployment was another factor contributing to higher wages growth in the public sector versus the private sector.

“This was the first time since Q1 10 that the public sector was stronger than the private sector in through-the-year growth,” Ms Allen said. “Jobs set by individual agreements are generally more tied to demand for labour. The loosening of the labour market seen in recent months is dampening wages growth pressure in individual agreements.”

The unemployment rate rose to its highest level in two years at 4.1 percent in January. It is up 0.5 percent in five months, which CBA says is a significant and somewhat concerning pace of change.

The ABS data showed that at an industry-wide level, quarterly wages growth in December was highest in education at 1.7 percent and lowest in accommodation and food at 0.3 percent. Annual wages growth was highest in health care and social assistance at 5.5 percent, which represents the greatest growth since the ABS introduced the Wage Price Index (WPI) data series in 1998. The lowest annual wages growth was in the finance and insurance services industry at 3.2 percent.

Federal Treasurer Jim Chalmers said workers were earning more under Labor, and from 1 July the amended Stage 3 tax cuts would allow them to keep more of that income.

“This is the first time since 2018 we’ve seen three consecutive quarters of real wages growth,” Dr Chalmers said. “Since the election, nominal wages have been growing at an annualised average of 4 percent, compared to 2.2 percent for our predecessors. This is a substantial turnaround in just 18 months.”

Ms Allen said CBA expects wages growth to moderate from here to 3.6 percent by year’s end.

“Near-term pressure will still occur from enterprise agreements, but a slowing economy, rising labour market spare capacity, and disinflation will gradually weigh on nominal wage increases.”

The ABS data was released on the same day as a report from economic research firm e61 Institute that found restrictions on job mobility, such as the rising use of non-compete clauses in individual contracts, have contributed to a 15-year slowdown in wages growth and productivity. According to e61, switching jobs results in an average 9 percent higher pay rise for workers, but today more than one-fifth of the workforce is restricted by non-compete and no-poach of co-workers agreements.

Such clauses are more common in knowledge industries and “many firms are deploying restraint clauses indiscriminately, potentially adversely affecting low wage workers who lack bargaining power,” said e61. The Federal Government established a Competition Taskforce Advisory Panel in August to investigate ways to increase productivity and wages growth, with non-compete clauses that stop workers from shifting to better-paying jobs one of the first issues to be considered.

For decades, the world’s computing power has quietly expanded at an astonishing pace.

From the first transistor developed at Bell Labs in 1947 to modern processors containing billions and even trillions of transistors, each generation of technology has been faster, smaller and more powerful than the last.

But according to quantum physicist and technology entrepreneur David Reilly, that era of effortless progress is beginning to slow.

Reilly, CEO of Sydney-based Emergence Quantum and Professor of Physics at the University of Sydney, says the computing infrastructure underpinning modern economies is approaching fundamental physical limits.

And that could have enormous implications for finance, artificial intelligence and global investment.

Speaking at an industry event organised by Kanebridge International, Reilly said many critical parts of modern society depend on computing and the infrastructure used to process information.

The slowdown behind the tech boom

For years, the technology industry relied on a steady improvement known as Moore’s Law, where the number of transistors on a chip doubled roughly every two years.

More transistors meant more computing power, allowing faster software, smarter devices and ever-larger data systems.

Today, however, those gains are slowing.

“It feels to me very innate that I’m going to just find that next year there’s going to be another breakthrough,” Reilly said.

“But if you look at the data…there’s a slowing down, a roll off in performance that started some 10, 20 years ago.”

Rather than making chips dramatically faster, manufacturers are now largely increasing computing capacity by packing more transistors onto each processor.

The approach works, but it comes with growing complexity, higher costs and increasing energy demands.

The brute-force race for AI

That challenge is already visible in the massive data centres being built to support artificial intelligence.

In the race to dominate AI, companies are constructing vast computing facilities that consume huge amounts of electricity and water. Reilly described this expansion as a “brute force” approach driven by the global competition to develop advanced AI systems.

Yet the demand for computing power continues to accelerate.

Artificial intelligence, advanced robotics, healthcare research, pharmaceuticals and cybersecurity all require far more processing capacity than today’s systems can easily deliver.

The question now facing the technology sector is whether traditional computing can keep up.

Enter quantum computing

That is where quantum computing enters the conversation.

Unlike conventional computers, which process information using binary switches that represent ones and zeros, quantum computers exploit the unusual behaviour of particles at the atomic scale.

Reilly describes them as a fundamentally different type of machine.

“So a quantum computer is a wave computer,” he said.

Instead of processing information through simple on-off switches, quantum systems can use wave-like properties of particles to process many possible outcomes simultaneously.

Those waves can interact in complex ways, reinforcing correct solutions while cancelling out incorrect ones. In theory, this allows quantum systems to tackle certain types of problems dramatically faster than classical computers.

What it could mean for finance

The concept may sound abstract, but its potential applications are significant.

Quantum computers are expected to transform areas such as materials science, chemical modelling and pharmaceutical development.

They could also help solve complex optimisation problems in logistics, finance and risk management.

For financial institutions in particular, the technology could offer new tools for detecting fraud, analysing market behaviour and optimising portfolios.

But the shift will not happen overnight.

“One message to take away is that quantum is not going to suddenly solve all of your problems,” Reilly said.

Instead, he said quantum systems will likely complement existing computing technologies as part of a broader and more diverse computing ecosystem.

Why data centres may soon “go cold”

One key change already emerging is how computing systems are physically designed.

Many next-generation technologies, including quantum processors, operate far more efficiently at extremely low temperatures. As a result, future data centres may rely heavily on cryogenic cooling systems to manage heat and energy consumption.

Reilly believes that the shift will gradually reshape the computing industry.

“Over the next five years, you’re going to see data centres go cold,” he said.

“And as that happens, they almost drag with them new compute paradigms.”

Emergence Quantum, the company he co-founded, is focused on developing technologies to support that transition, including cryogenic electronics and integrated hardware platforms designed for quantum computing and energy-efficient systems.

A new technological era

For investors and businesses, the technology remains in its early stages. But the scale of global interest is growing rapidly.

Governments, research institutions and technology companies are investing heavily in quantum research, betting it could become a foundational technology for the next generation of computing.

For Reilly, the moment feels similar to earlier technological turning points.

In the 19th century, new discoveries in thermodynamics helped drive the development of steam engines and the Industrial Revolution. In the 20th century, advances in electromagnetism led to radio, television and eventually the internet.

Quantum physics, he suggests, could represent the next chapter in that story.

“Today we have, as a society, in our hands new physics that we’re just beginning to figure out what to do with,” Reilly said.

“But I think it’s an exciting time to be alive and watch what happens over the coming decades.”