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The chances of a June rate rise have slimmed amid evidence that wages pressures peaked last year, even as private sector workers take advantage of Australia’s tight jobs market to score the biggest pay rises since the global financial crisis.

Annual wages growth hit a decade-high of 3.7 per cent in the March quarter, driven by strong growth in private sector pay packets, which are 3.8 per cent higher over the year, the Australian Bureau of Statistics said on Wednesday.

Despite the strength in private sector pay, economists said the latest wage price report was unlikely to force the RBA to lift interest rates at its June 6 meeting. Wages increased by 0.8 per cent in the first three months of the year, below market expectations of 0.9 per cent growth and weaker than the June and September quarters last year.

Markets pared back expectations for a near-term increase in the cash rate, currently 3.85 per cent, after the highly anticipated data report. They now put a 50 per cent chance on an interest rate rise by August, down from 60 per cent before the release of the wage price index. The probability of a move in June is negligible.

The prospect of a rate rise as soon as next month became more likely after the release on Tuesday of the minutes of the RBA’s May 2 meeting, which revealed the central bank’s growing concern that flatlining productivity could make forecast rates of wages growth inconsistent with low inflation.

Pay rises for workers on individual agreements were the main driver of wages growth, contributing to almost 60 per cent of the boost to salaries in the year ended March 31.

About 14 per cent of private sector employees received pay rises in March, which was in line with the pre-pandemic average. Workers who got a pay bump had an average 4.3 per cent wage increase, the highest rate since at least 2010.

About one in 10 workers who had a pay bump got an increase above 6 per cent, while one in four employees received an increase between 4 per cent and 6 per cent. The proportion of pay rises in the 0 to 3 per cent range has declined to 47 per cent from 80 per cent in mid-2021.

Employers have also made increasing use of bonuses. Private sector wages including one-off remuneration increased 4.1 per cent in the past 12 months.

JPMorgan chief economist Ben Jarman said there was evidence that wage pressures were moderating, with the two strongest quarterly wages prints recorded mid-last year.

“On net, today’s data suggest that the peak in quarterly growth is past, making the prospect of sustained target-inconsistent growth rates less likely, though the strength is becoming more broad-based,” Dr Jarman said.

“Still, the Fair Work Commission’s minimum wage decision lies ahead in June and will probably add a bit more inflationary risk premium to the RBA outlook.”

HSBC chief economist Paul Bloxham said the past couple of quarters of data showed wages growth was not accelerating further.

“For instance, 13 out of 18 industries experienced a slowing in the pace of quarterly wages growth,” Mr Bloxham said.

“Wages in accommodation and food services, arguably one of the industries that was most exposed to the labour shortages late last year, only grew by 0.1 per cent in the quarter, down from 1.7 per cent in the previous quarter.”

Public sector wages growth appears to be accelerating after a long period of underperformance, increasing 0.9 per cent in January-March, to be 3 per cent higher over the year.

CBA economist Belinda Allen expects government salaries to strengthen further.

“We expect stronger public sector wages to continue over coming quarters as longstanding wage caps are lifted, and enterprise bargaining agreements are reset at higher rates of pay as they expire,” she said.

The Albanese government offered more than 160,000 public sector workers a 10.5 per cent pay rise on Tuesday, delivering 4 per cent in the first year, 3.5 per cent in the second year and 3 per cent in the third.

Employees in the education and training industry received the largest pay rise in March, recording an average wage increase of 1.5 per cent.

Even though wages growth has picked up sharply in the past 12 months, high inflation means workers further slide backwards in real terms.

NAB economist Taylor Nugent said the latest report would give the RBA more confidence that wages growth is stabilising.

“At face value that is likely to keep the RBA characterising the Australian wages outlook as a point of difference to offshore and keep the RBA on the sidelines in June,” Mr Nugent said.

While the RBA expects nominal wages growth to accelerate to 4 per cent by the end of the year, it is increasingly concerned that lacklustre productivity growth rates will mean salary increases of this magnitude will push inflation higher.

In the minutes of the May 2 board meeting, the RBA noted that its forecast for inflation to fall to 3 per cent by mid-2025 was predicated on productivity growth returning to about the modest pace recorded before the pandemic.

“If this did not occur, growth in unit labour costs would be uncomfortably fast,” the minutes said.

Without an increase in productivity, nominal wage rises of 3.5 per cent to 4 per cent would be inconsistent with the inflation target, and raise the prospect of further interest rate rises.

Treasurer Jim Chalmers and Workplace Relations Minister Tony Burke said wages growth was not the problem when it comes to inflation.

“It’s part of the solution to the cost-of-living pressures Australians face,” a joint ministerial release said.

Labour productivity, represented by the level of output produced per hour of work, is the same today as it was three years ago, after falling 4.2 per cent from its peak in March last year.

Higher productivity growth allows the economy to expand faster without generating inflation, and it is also the dominant driver of real wages growth over the long term.

Workers have experienced the strongest annual wage growth in a decade but it remains within Reserve Bank forecasts, tempering fears the larger pay packets will fuel an interest rate rise next month.

Wages grew by 0.8 per cent over the first three months of the year and by 3.7 per cent in the 12 months to March, Australian Bureau of Statistics figures show, which is the largest annual increase since September 2012.

But when factoring in inflation, real wages have fallen by 3.2 per cent over the past year. Inflation has eased from its December peak of 7.8 per cent to 7 per cent in March.

Wednesday’s wage growth data, along with the updated unemployment rate being released by the ABS on Thursday, will be key figures factoring into the Reserve Bank board’s interest rate decision at its June meeting.

In May, the bank surprised economists and financial markets by raising the official cash rate by 0.25 percentage points to 3.85 per cent. Board meeting minutes published this week show board members were willing to keep lifting rates depending on how the economy evolves.

The annual lift in wages is near the RBA’s expectations, and it forecasts annual wages growth will reach 4.1 per cent in the second half of the year. Economists say the wage growth reflects a strong jobs market, but workers will continue to feel like they are going backwards.

Callam Pickering, the Asia-Pacific economist for jobs site Indeed, said cost of living pressures continue to outstrip wage gains, meaning the real purchasing power of households has plummeted.

“Adjusted for inflation, Australian wages have fallen by 3.2 per cent over the past year and by 7.2 per cent since their peak,” he said.

“Unless you’ve received a promotion or changed employer recently, there is a good chance that your salary buys a lot less now than it did a year ago.”

EY senior economist Paula Gadsby said this fall in real wages was weighing on consumer confidence.

“[This] is likely behind some of the softening of consumption. The ANZ Roy Morgan survey out yesterday indicated that consumer confidence is at its lowest level since April 2020 – the start of the pandemic,” she said.

Australia’s largest banks have mixed views on where the RBA will go with interest rates from here; Westpac and ANZ expect the bank to hold rates steady in June but lift them in August after getting updated inflation figures. Commonwealth Bank believes the current rate of 3.85 per cent is the peak, and forecasts the RBA to start cutting rates in the final months of the year.

But there is still a chance the RBA lifts interest rates again, potentially as soon as next month according to Sean Langcake, the head of macroeconomic forecasting for Oxford Economics Australia.

“The RBA has made it clear that, absent a pickup in productivity growth, this pace of wage growth and inflation warrants tighter policy settings,” he said.

Shadow treasurer Angus Taylor said if Australians wanted higher real wages, the government needs to get inflation down.

“We want to see those real wage increases. The pathway to that will include needing to put downward pressure on inflation,” he said at the National Press Club on Wednesday.

“Labor promised an increase in real wages before the election, and they themselves in these budget papers had admitted in this term of government, in these three years, that ain’t going to happen.“

Fair Work Commission president Justice Adam Hatcher has sounded a warning that the 7 per cent increase for both the minimum wage and award rates sought by the ACTU might encourage the RBA to send interest rates higher.

In late June, the Fair Work Commission will hand down its decision on the minimum wage rise, which will directly affect about 180,000 workers but will have flow-on effects for up to 2.7 million people whose pay is set by an industry award. The government supports the minimum wage rising in line with inflation.

Justice Hatcher told unions at a hearing into the minimum wage on Wednesday that there appeared to be “some distance” between the government’s calculations that the minimum wage would be hiked in line with March inflation and the “slightly less direct message from the Reserve Bank about what sort of outcome from this review would be consistent with reducing inflation”.

Hatcher said he was considering if “a perceived high figure emanating from this review might encourage or cause the RBA to hike interest rates again and leave some households worse off”.

Earlier on Wednesday, Treasurer Jim Chalmers said decent wages were part of the solution to easing cost of living pressures, and he did not expect higher wages to add pressure to inflation.

“We want people to be able to earn a decent wage and provide for their loved ones,” he said.

“We don’t have an inflation challenge in our economy because people are getting paid too much. We’ve got an inflation challenge in our economy, because Vladimir Putin invaded Ukraine, and we’ve got busted supply chains here at home,” he said.

Employment Minister Tony Burke it was not a choice between fighting inflation and lifting wages, and poorer workers deserved better pay.

“In terms of the Annual Wage Review, we certainly think people on the minimum wage need to be in a situation where they’re not going backwards,” he said on ABC radio on Wednesday.

Almost half of job seekers have declined an offer due to unsatisfactory flexible work options, new research suggests. Make sure your company doesn’t lose out on talent by developing a robust flexible work policy.

Is your flexible work approach up to scratch? New research commissioned by Officeworks found that nearly one in three Australian employees whose work could be performed at home say their employer does not have a flexible work policy. On top of this, 78 per cent say they wouldn’t work for a company without a formalised approach.

The report, which surveyed over 1000 Australians, also found that employees believe two or three days working from home each week was ideal.

“Given the tight economic outlook where [competitive] salaries might be off the cards, flexibility has moved from a nice-to-have to a must-have. It’s all about choice and control,” says Future of Work expert and AHRI Board member Dr Ben Hamer CPHR.

The argument for flexible work

Hybrid and flexible work arrangements have become embedded into Australian workplace culture, according to Alexandra Staley, General Manager – People, Officeworks.

“Embracing flexibility is becoming a fundamental requirement when trying to attract, secure and retain talent,” she says. 

“Hybrid working also has many benefits to both team members and employers, not only from a lifestyle perspective, but also from a productivity, retention, collaboration, cultural and connection perspective.”

Nearly 60 per cent of employees who worked for companies with formalised flexible working policies felt positively towards their employer, with 56 per cent reporting boosted productivity, 61 per cent reporting increased morale and 49 per cent agreeing that it improved organisational culture.

“The role of the office has fundamentally changed,” says Staley. “It’s now increasingly focused on collaboration and connection. The [report] found that 58 per cent of respondents prefer working from home, as [they feel it is a] better environment for deep-focus activity,” says Staley.

In saying this, there are still plenty of bosses who want their people back in the office. Research from Robert Half shows that nearly 60 per cent of employers want people to increase their time in the office this year, citing enhanced corporate culture (70 per cent), skills development and career progression (68 per cent) and productivity (66 per cent) as their reasoning.

Hamer says HR professionals often get caught in the middle of the arguments for and against flexible work.

“On one hand, their executive team is pulling them in one direction with an expectation to get everyone back into the office. And on the other hand, employees are pulling them in the other direction asking for choice and flexibility. 

“For HR professionals, it’s about trying to get to the root cause of why, because coming into the office is often a perceived solution for a problem that we’re not clear on,” he says.

The challenges of dispersed working

Despite the many benefits of embracing a culture of flexible working, it doesn’t come without its challenges, says Hamer.

“There are mental health and psychosocial challenges, such as feeling lonely and isolated, or increased levels of stress from less frequent communication.”

Staley adds, “Due to the rapid approach of the pandemic, understandably, many employers were thrust into the flexible working model without having properly developed an approach.”

Hamer believes these risks can be mitigated by having employers assess employees’ work-from-home setups to prevent WHS issues (45 per cent of respondents reported a health issue from working from home, such as neck pain) and training middle managers to manage and mitigate psychological hazards.

But, with 41 per cent of people in the Officeworks research reporting that working from home is better for their mental health, it’s worth taking the pulse of your employees to get a sense of what arrangements would best suit them.

“Employers need to consult their people. It doesn’t matter if it’s asking for five days or one day in the office. At the end of the day, it comes down to valuing your people and that means asking for their input into the decisions that affect them,” says Hamer.

Hamer warns employers against assuming that, simply because the Great Resignation is over, they don’t need to prioritise employees’ needs in the same ways they did in 2021-2022. 

“Organisations should not get complacent. [They have to] recognise that they still need to up their game when it comes to a compelling employee value proposition, and supporting flexible working goes a long way to that,” says Hamer.

Designing your own flexible work policy

If you’ve not yet got a flexible work policy in place, this infographic, originally published in February this year, has some helpful considerations to keep in mind.

Unemployment has climbed to 3.7 per cent in April from 3.5 per cent, as a surprisingly weak month for the labour market buoyed hopes the Reserve Bank would not hike rates as soon at its next meeting.

The unexpected jump in the jobless rates came as the number of employed people dropped by 4300, according to seasonally adjusted figures from the Australian Bureau of Statistics.

A 22,800 increase in part-time workers in April was more than offset by a 27,100 drop in full-time employment, the data showed.

This compared to the consensus forecast among economists for a 25,000 lift in employment, and for an unchanged jobless rate.

Despite the worse-than-anticipated labour force figures, unemployment remains at around 50-year lows. The latest data will also likely ease pressure on the RBA to deliver a 12th rate hike when it meets next month.

Jim Chalmers said the jobless rate remained “remarkably low”.

“We have expected for some time that the unemployment rate will tick up a bit as a consequence of higher interest rates, combined with some pretty serious global uncertainty, and that’s what we’re seeing in these unemployment numbers,” the Treasurer said in Perth.

“But it is still pretty remarkable that we enter this period of substantial global uncertainty with unemployment with a three in front of it,” he said.

There was worse news for younger workers, with the youth unemployment rate lifting from 7.8 per cent to 8.6 per cent – the highest in almost a year, but still far below the 12 per cent pre-pandemic level.

ABS head of labour statistics Bjorn Jarvis said the “small” drop in the number of people with jobs in April came after the economy created 39,000 jobs over the first three months of the year.

The ABS figures showed the employment-to-population ratio fell 0.2 percentage points to 64.2 per cent, while the labour force participation rate eased by 0.1ppt to 66.7 per cent.

“Even with these falls, both indicators were still well above pre-COVID-19 pandemic levels and close to their historical highs in 2022,” Mr Jarvis said.

The underemployment rate, which measures the proportion of workers unable to find additional hours of work, fell to 6.1 per cent, from 6.2 per cent in April.

Despite fears of a slowing economy and rising financial stress among households, the labour market still remains at its tightest since the 1970s, and well below official estimates of full employment.

Ivan Colhoun, the chief economist in NAB’s institutional division, said the latest figures were “consistent with the view that the Australian labour market is beginning to ease but is a long way from easy”.

This week’s wages figures showed an acceleration in pay rates to a decade-high of 3.7 per cent, but that pay pressures remained within the central bank’s forecasts.

Mr Colhoun said the wages and now the disappointing jobs numbers “together reduce the risk the RBA would opt to raise rates again as soon as June”.

The RBA was still likely to deliver another hike to 4.1 per cent by July or August, he said.

The Reserve Bank’s 11 rate rises since May last year have yet to blunt demand for workers, with nearly 440,000 job vacancies, or nearly twice the pre-Covid number and against the 528,000 unemployed people in the latest ABS jobs numbers.

Close to nine in 10 businesses say they are struggling to find employees, according to NAB.

The RBA forecasts unemployment will lift to 4 per cent by the end of the year, and for it to trend upwards from there.

Generation Z comprises people born between 1996 and 2010. This generation’s identity has been shaped by the digital age, climate anxiety, a shifting financial landscape, and COVID-19.

Gen Z is currently the second-youngest generation, with millennials before and Generation Alpha after. Like every generation, Gen Z’s behaviors are shaped by how they grew up. Young people today have come of age in the shadow of climate doom, pandemic lockdowns, and fears of economic collapse. The first Gen Zers were born when the internet had just achieved widespread use. They’re called “digital natives”—the first generation to grow up with the internet as a part of daily life. The generation spans a wide range: the oldest Gen Zers have jobs and mortgages, while the youngest are still preteens. Globally, Gen Z is growing fast: Gen Zers will make up a quarter of the population of the Asia–Pacific region by 2025. Read on to understand what makes Gen Z tick.

What is a generation?

No doubt you’re already familiar with the concept of generation within families. Your grandparents, parents, children, and children’s children all make up a distinct generation in relation to you. But each of them also belongs to a diffuse category of their peers, grouped together based on when they were born and what they experience during their lives. Social scientists have studied generations—in theory and more practically—for millennia. More recently, thinkers like August Comte have argued that generational change is the engine behind social change. More specifically, each generation entering into a new life stage at more or less the same time is the pulse that creates the history of a society.

Specific major-scale events can also shape the outlook of a generation and are often reflected in how they’re named. The Lost Generation, for example, is named for the malaise and disillusionment experienced by people who lived through World War I. Later, the Greatest Generation was named for the heroic sacrifice many made during World War II. Their children, born soon after the war ended, are called baby boomers; their outlook, in turn, was colored by the Vietnam War and the social upheavals of the 1960s. More recently, millennials’ worldviews have been shaped by the September 11 attacks and the proliferation of the internet.

Of course, these are generalizations: every so-called generation comprises a multitude of unique individuals with their own opinions, values, behaviors, and plans for the future. Some social scientists even believe that the practice of studying generations can obfuscate what motivates people on an individual level. Generational theory should be understood with this caveat, and used only as a way of thinking about society, rather than the gospel truth.

What is unique about Gen Z?

While there are substantive differences within the cohort known as Gen Z, there are a few commonalities its members share.

As the first real digital natives, Gen Zers—speaking generally—are extremely online. Gen Zers are known for working, shopping, dating, and making friends online; in Asia, Gen Zers spend six or more hours per day on their phones.

Digital natives often turn to the internet when looking for any kind of information, including news and reviews prior to making a purchase. They flit between sites, apps, and social media feeds, each one forming a different part of their online ecosystem. Having grown up with social media, Gen Zers curate their online selves more carefully than those in prior generations have, and they are more likely to turn to trends of anonymity, more personalized feeds, and a smaller online presence, even as they voraciously consume media online.

Video-sharing social media sites have seen a meteoric rise as Gen Z comes of age. TikTok currently rules trends, feelings, and culture for Gen Zers, who make up 60 percent of the app’s one billion-plus users. Gen Zers flock to corners of the internet where they can discuss their passions and interests with those who share them—from gaming to K-pop—bonding with both people they know in real life and ones they’ve only met online.

Gen Z also faces an unprecedented behavioral health crisis: US Gen Zers surveyed by McKinsey report the least positive outlook and the highest prevalence of mental illness of any generation, and European respondents report struggling with self-stigma. This pessimism is fueled by growing global unrest, wars and disruptions, financial crises, and educational interruptions due to the COVID-19 pandemic. Feelings of “climate anxiety” are also widely reported: many Gen Zers report that they think about the fate of the planet on a daily basis.

They are already seeing decreased economic opportunity and don’t assume a social safety net will be there to catch them as pensions shrink, saving for retirement gets more difficult, and the older population grows. Already, 58 percent of Gen Zers in a recent McKinsey survey reported not having a basic social need met—the largest percentage by far of any generation.

But Gen Zers also report a more nuanced perspective around the stigma of mental illness than other generations. European Gen Zers seem less inclined to discriminate against people with mental illness (although they do stigmatize themselves).

However, Gen Z is also generally known for its idealism—they’re part of a new wave of “inclusive consumers” and socially progressive dreamers. Generally speaking, Gen Zers believe in doing their part to help stop the intensification of climate change and to establish greater equity for all. More than any other generation, Gen Z collectively demands purpose and accountability, the creation of more opportunities for people of diverse and underrepresented backgrounds, and rigorous sustainable and green practices.

How are Gen Zers different from millennials?

Those on the cusp of Gen Z and millennial—people who were born shortly before the turn of the millennium—are sometimes referred to as “Zillennials” or “Zennials.” That includes older Gen Zers who’ve been in the workforce for a few years and young millennials who identify more with Gen Z.

However, Gen Z generally has its own formative experiences distinct from those of most millennials. Here are some ways American Gen Zers differ from their older counterparts:

• They are generally more pragmatic, with both complicated idealism and worries for the future. Gen Zers dream of personal career fulfillment but expect economic struggles.
• They have less positive life outlooks, with lower levels of emotional and social well-being than older generations.
• They are more interested in belonging to an inclusive, supportive community.
• They are more individualistic, with a stronger sense of personal expression.
• They are more politically and socially active, advocating for what they believe on social media.

What are Gen Z’s values?

Gen Zers generally have strong values related to racial justice and sustainability. Mobilizations like the Global Climate March, led by Gen Z activist Greta Thunberg, thrive on the activism of young people.

Climate change is one of the issues Gen Zers care about most. They frequently call for reform on personal, public, and global scales to prevent future catastrophe. Many Gen Zers describe themselves as environmentally conscious, and the majority of Gen Z expects to see sustainability commitments from companies and organizations.

Gen Z is also living in a time marked by rapidly rising inflation and financial woes. Rising student loan debt also plagues many members of this generation.

What are Gen Z fashion trends?

Gen Z loves expressive clothes, wants to stand out rather than fit in, and has an ever-changing style—what was in a month ago might already be out today. Their trend-chasing habits are supported by fast-fashion retailers supplying accessible ways to switch it up. One Gen Z staple shop, Chinese fast-fashion giant Shein, adds 6,000 new products to its website per day. This may seem at odds with the generation’s values of sustainability, but the speed at which Gen Z trends change and their desire for unique style can sometimes overcome their eco-scruples.

Gen Zers also love thrifting and vintage styles—which are much more in line with their calls for circular fashion. Both ’90s and y2k-style clothes have seen a major comeback, including fast-fashion dupes and clothes dug out of closets and thrift stores. Fashion resale has experienced massive growth thanks to Gen Z resellers and influencers, and it’s normal for a Gen Z wardrobe to be a mix of cheap fast fashion and treasured vintage pieces.

What do Gen Z shoppers want?

The internet has changed retail forever and shaped the tastes of digital natives. Here’s how:

• Consumption is about access rather than ownership—Gen Zers subscribe to streaming platforms instead of buying films or music. This trend extends even to services like car shares or luxury-clothing rentals.
• Gen Zers accept their tastes might change, and they are more likely to spend on experiences that enrich their day-to-day lives than millennials, who are more likely to splurge on luxury.
• Members of this generation care about ease of use: mobile pay, app-based services, and simple online transactions are important, and brands have found major success by restructuring to suit Gen Z tastes.
• Gen Zers like brick-and-mortar stores more than millennials do but still want a great online shopping experience. Some brands have even found success through online-first launches, often supported by Gen Z consumers.
• Ads are everywhere; Gen Zers experience brands “at every moment” as they move through their digital and physical worlds.

And as a generation committed to its values, Gen Z expects the same of its retailers—Gen Zers often choose brands that have a strong story or purpose, as well as those committed to green practices. In one McKinsey study, 73 percent of Gen Z reported trying to purchase from companies they consider ethical, and nine out of ten believe that companies have a responsibility to address environmental and social issues. However, they can tell when a brand is just paying lip service and isn’t backing up diversity or sustainability claims with real change.

Many Gen Zers throughout Asia see the internet as the first place to go when researching new products to purchase; in the United States, 40 percent of Gen Zers admit to being influenced online, often by the brands featured in the videos they watch. Members filter a lot of information, from influencers, family, and friends, to decide where and how they want to spend.

Macquarie Group boss Shemara Wikramanayake says Australia’s rebound in immigration and its natural resource endowments put the nation in a better position than other economies to weather a coming slump caused by rising interest rates and inflation.

Speaking to investors in Sydney on Tuesday before a surprise rise in interest rates, Wikramanayake said the market expected a “material” slowdown in Europe and America as central banks sought to rein in inflation, and Australia was not immune to the trend.

“In Australia as well, the inflation persists, and we are going to have to take action to slow the economy as part of reining that in,” she said at the Macquarie Australia Conference.

Even so, Wikramanayake said Australia’s economy had performed better than many others over the last 25 years, and she argued there were a few key reasons why it would be more resilient this time around as well.

“I think there are a few underlying and structural drivers that impact that, and I think they will also result in our having a milder downturn than big global economies,” Wikramanayake said.

After Wikramanayake’s remarks, the Reserve Bank announced it was raising official interest rates to 3.85 per cent, and said it could increase interest rates further. The change, which was not priced in by financial markets, would increase monthly repayments on an average $500,000 loan by $78, RateCity said.

Some economists worry the RBA is pushing too hard on the brakes, with head of Deloitte Access Economics saying the central bank’s latest hike was unnecessary, and it was playing “recession roulette.” But Wikramanayake said strong immigration and access to natural resources would help to shield the domestic economy.“

As you all know, immigration has really picked up again. So, that is going to drive underlying growth here, which will shield us a bit from the extent of the downturn that global peers are going to have,” she said.

“We also are blessed with things like access to our own commodities in terms of responding to energy issues, and other natural resources in terms of also renewable energy and what we have in terms of advantages in things like wind and solar.”

Household spending is expected to slow this year after interest rates have surged from 0.1 per cent to 3.85 per cent since last May, but Wikramanayake said Australia’s interest rates were still lower than where they were when Macquarie held its first investor conference in 1998, when the cash rate was 5 per cent.

“So you know, yes it’s impacting households, yes, it’s impacting businesses, but it’s at a level - both the inflation and the interest rate environment here - where we should be a bit more resilient than other economies,” she said.

Macquarie says its Australian investor conference is the largest institutional investor gathering in the region, with more than 100 companies presenting and more than 110 global investors attending the event.

Wikramanayake also highlighted long-term trends that will be discussed at the event, including the rise of artificial intelligence (AI) and machine learning, the surge in investment caused by decarbonisation, and growth in capital invested outside public markets.

Wikramanayake said despite the challenges posed by AI applications such as ChatGPT, such technology also presented big opportunities for investors.

Macquarie will report its full-year results this Friday, and analysts are expecting a result of about $5 billion.

COVID-19 sparked a lasting exodus from Australia’s capital cities, with families moving to cheaper homes in regional and outer-metropolitan areas to take advantage of the historic shift to more flexible work arrangements.

The main recipients of the pandemic-era migration were south-east Queensland and small coastal communities with more spacious homes, according to analysis by The Australian Financial Review of newly released regional population data from the Australian Bureau of Statistics.

Brisbane, the Gold Coast and coastal areas of south-east Queensland, up to Bundaberg, all recorded net population in-flows. Overall, close to a net 87,000 Australians moved to Queensland between June 2020 and June 2022.

The analysis is limited to internal migration, which describes population shifts arising from Australians pulling up stumps and moving to a different area. Overseas migration and natural increases are not considered.

About 86,000 people left Sydney in the first two years of the pandemic, between June 2020 and June 2022, while close to 60,000 Melburnians exited the city.

Parramatta in Sydney’s west, and Brimbank and Dandenong in Melbourne’s outer south-east, all lost more residents to internal migration than any part of the country.

The three areas haemorrhaged more than 10,000 locals each between June 2020 and June 2022, or more than 5 per cent of their estimated resident populations.

The other areas that faced the largest absolute resident outflows were all in Sydney, including Fairfield, which lost 8400 residents (4.3 per cent of its population), Sydney’s inner city (7600 residents, 3 per cent of its population), and Canterbury (7000 residents, 4.8 per cent of its population).

The areas that experienced the largest inward population flows were fast-growing areas on the outskirts of capital cities and lifestyle destinations along the east coast, particularly in the sunshine state.

Thomas and Helene Smeulders moved from Sydney to Brisbane with their 19-month-old daughter Clementine. They had planned to live in NSW indefinitely but re-evaluated things once the pandemic hit.

Ms Smeulders, who works for a disability not-for-profit, said being able to afford a house and being closer to family were factors.

“When we thought about the lifestyle that we would have in NSW, there was just no getting around the fact that we were going to be in a two-bedroom apartment, upwards from an hour out of Sydney.

“That commute was not going to be great for our family, but in Brisbane, we’d be able to have a house that was 15 minutes’ drive from the CBD. That commute was much more family friendly.”

Mr Smeulders, a consultant working in climate with KPMG, said pandemic border closures had forced the couple’s rethink.

“The assumption was we could come back any weekend we wanted, and we did. When that assumption was tested, it actually felt like a long way.

“That is still in the back of our minds. We missed deaths in the family and funerals and births. They’re all those things you would never imagine missing.”

Coastal communities gain

Molonglo on the outskirts of Canberra, Rouse Hill and Blacktown in Sydney’s rapidly expanding north-west, and Jimboomba to Brisbane’s south, experienced net internal migration flows greater than 10 per cent of their populations between June 2020 and June 2022.

Coastal communities were the other major destinations for locals fleeing capital cities.

Victoria’s Surf Coast gained more than 6000 people from internal migration, or 7 per cent of its population. Western Australia’s Margaret River and NSW’s Port Macquarie region both experienced a 3.7 per cent boost in residents, welcoming 2000 and 3200 sea-changers, respectively.

South Australia’s Fleurieu peninsula, home to the McLaren Vale wine region, and parts of Victoria’s Gippsland region also had thousands of arrivals.

Byron Bay mayor Michael Lyon told The Australian Financial Review internal migration during the pandemic had badly exacerbated the area’s housing crisis.

Byron has the highest rate of homelessness in the state outside Sydney, and the council looks set to implement a 60-day cap on some short-term holiday rentals in an effort to generate more long-term rental supply.

“It’s different in the big cities. If there’s pressure in one suburb you can just move further down the road, but in small towns and regional areas, it becomes a nightmare.

“For us right now, it’s almost worse than tourism. Lots of the new residents who have come here are using the region as a base but working from home and not doing much more than buying a coffee from the cafes.

“It’s not a great trend for us. The businesses in the area badly need workers.”

Australian National University demographer Liz Allen is not surprised residents of big cities sought relief after COVID-19.

“Remote learning and working from home enabled a telecommunication-aided migration. Those living in housing that wasn’t quite meeting their lifestyle needs and wants were able to take greater control of their living arrangements,” she said.

“Bigger backyards, more rooms in the home, or a change of pace were made possible for those who could afford it. Once people were no longer tied to their physical place of work, opportunities for housing were vastly broadened. But these opportunities are short-lived, as workers working from home are being recalled to the office.”

Dr Allen said Australia’s international border closure meant there had been no new arrivals into metropolitan areas, resulting in what may look on the surface as an exodus but is instead a lack of inbound migration.

“Australians choose their housing based on location to things like education and employment that meet their lifestyle and affordability requirements. It’s hard to know whether people were moving during COVID for lifestyle, finances, something else, or because of all of this.

“The key here is that people had greater choice because of telecommunication-aided migration. There is much to learn here about movers and their motivations, and what we could then put in place to better support Australians achieve their housing preferences.”

She said a regional renaissance was unlikely after the pandemic.

“In the absence of any real change in the way we do work and where employment is concentrated, Australia’s population distribution will still favour major cities. Jobs and learning are major pull factors for cities. I’m concerned for the people that moved during the height of COVID and are now stuck on the fringe of society without a hope of adequate supports.”

Small business is set to be included in electricity bill relief measures announced in Tuesday’s federal budget, as new research shows Australia’s tight jobs market has kept up pressure on bosses to retain the best staff.

Figures from a new MYOB survey of more than 1000 small business owners around the country show nearly 40 per cent of small and medium enterprises say they are feeling pressure to retain their workers, while hiring new staff remains a concern for 36 per cent.

Just 9 per cent of business owners are looking to hire full-time workers, the survey completed on Friday found. While 12 per cent of bosses are looking to hire part-time or casual workers, more than a third said they were not planning on offering pay rises to existing staff this year.

MYOB chief employee experience officer Helen Lea said the study showed small business owners were looking to keep their employee numbers steady, while one in five recognised they would need to increase staff pay.

“We know many small businesses are having real trouble hiring for the jobs they need,” she told The Australian Financial Review.

“Offering increased salary is one way to attract talent, though that could be a challenge for businesses facing decreased consumer spend and associated income.

“It’s encouraging to see survey respondents with more than five employees are likely to increase their workforce, suggesting that despite challenging economic conditions, there is some cause for optimism for the year ahead.”

Ahead of the budget, 13 per cent of businesses said they hoped for more federal government support for hiring staff.

“With more than 7.4 million employees, small business is the largest employer in the country and accounts for more than 99 per cent of Australian enterprises,” Ms Lea said.

“Small businesses are the lifeblood of our economy, and supporting them in the upcoming federal budget is key to driving economic recovery.”

Treasurer Jim Chalmers confirmed on Sunday about 1 million small businesses around the country were in line to get extra assistance with electricity bills in the budget.

The money will flow from federal and state government coffers.

“We’ve struck eight different deals with different jurisdictions around the country,” Dr Chalmers said. “But we hope and we expect that it will take some of the sting out of these price rises, which are putting pressure on families and households and small businesses.”

The latest ANZ-Roy Morgan Australian consumer confidence monitor showed an increase of 1.8 points last week. While confidence fell in states including NSW, Victoria and South Australia, it rose in Queensland and Western Australia.

ANZ senior economist Adelaide Timbrell said the rise represented the biggest weekly increase since mid-February.

“This was driven by outright home owners, whose confidence jumped 3.7 points on average, compared with more modest increases among renters (+0.5 points) and those paying off their homes (+0.6 points).

“This may be due to an uptick in housing prices in March and April. Confidence about both finances and the economy rose during the week, with the strongest gain in confidence about ‘future economic conditions’.”

Ms Timbrell said the measure of consumers who say it is time to buy a major household item eased by 0.4 points in the survey, but was still the second-strongest result since late February.

When we talk about preparing people for the workforce, it is often framed as being a choice between vocational education, going to university, or on-the-job training.

The problem with that paradigm is that the speed of technological advances means future workers will probably need to do all three, and not just once. They will need to constantly move in and out of education throughout their careers to update their knowledge and skills.

The sensible first response is to make it easier for students to move between the three settings, and to ensure they receive recognition for their previous learning – no matter where it occurred. But a new experiment in Sydney’s north-west goes a step further by looking at how a fully integrated approach could work.

Earlier this year, the Institute for Applied Technology (Digital) opened its doors on a site at Meadowbank TAFE. It brings together the University of Technology Sydney, Macquarie University, TAFE NSW and Microsoft.

It aims to take the best of each type of training, giving learners a rigorous yet practical and industry-relevant education in digital technologies such as big data, cybersecurity, software development and artificial intelligence. Employers are crying out for graduates in these areas, and that demand is only expected to increase.

This is a significant moment for those of us who have been trying to offer integrated educational offerings in Australia.

IATs were originally recommended by Professor Peter Shergold and David Gonski in their 2020 review of the NSW vocational education and training sector. The report’s findings were clear: the future of education must involve a more seamless, connected approach that puts the learner at the centre of the system. The IATs are one model to achieve this.

Progressive pathways

IATs are a distinctive, and new, form of tertiary education – blending VET and higher education with a focus on preparing students with industry-based employability skills to meet emerging workforce needs.

IATs are not super-TAFEs, nor dual-sector institutions. Nor do IATs replace university-based programs that already deliver foundational or bridging courses to higher education students.

IATs integrate curriculum with progressive pathways, through which students will be able to stack meaningful qualifications that are valued and recognised by industry.

It is the education delivered that is distinctive: IATs integrate practical and theoretical components of education by bringing the best of academia and industry together. They address shortcomings in the tertiary system, such as responsiveness to changing industry training needs. Students gain skills and microcredentials that are recognised by education partners.

The national universities accord process has this in its sights, as does the new Jobs and Skills Australia.

The Productivity Commission recently recommended other states and territories follow the example set by NSW’s IAT model. The point has been made repeatedly that the current system does not work for students. It would seem the political appetite to find solutions is finally here. So, what are the possible solutions?

Changes to current funding settings must better incentivise collaboration, co-design and innovation across industry and providers.

For the IATs in NSW to succeed, we need to spend the next four years expanding the program and evaluating what works, with continuing state government support and, ideally, additional federal support.

Other individual universities and TAFEs are collaborating in parts of the country, but this activity is ad hoc and, by all accounts, many of the same pain points are being felt. We need a determined push by state and federal governments to evaluate the various pilot programs, catalogue the barriers and commit to breaking them down.

In the longer term, governments need to work together. Changes to current funding settings must better incentivise collaboration, co-design and innovation across industry and providers, and provide students with a smoother transition across different loan and fee settings.

This work is complex and won’t be done in a year. One of the outcomes of the universities accord process should be the initiation of a formal co-ordinating council to address issues at the intersection of VET and higher education, including qualifications, reciprocal recognition of prior learning, collaborative courses, provider funding models and student funding, preferably with a commitment to Commonwealth Supported Places for joint courses like those on offer at the IATs.

This would go a long way to creating a future nation that has the individual students and their future employability at its heart.

Professor Bruce Dowton is vice chancellor of Macquarie University and Professor Andrew Parfitt is vice chancellor of University of Technology Sydney.

The retailer group representing Coles and Woolworths has called for a 3.8 per cent increase in minimum and award wages, the highest of all the employer groups.

A submission by the Australian Retailers’ Association (ARA) to the annual wage review argues a 3.8 per cent increase would account for a forecast drop in inflation by June 2024, as well as the 0.5 per cent rise in superannuation.

The wage increase would flow on to 2.6 million award workers as well as hundreds of thousands under retail and fast-food agreements, which tie their annual wage rises to the minimum wage decision.

But the Shop Distributive and Allied Employees Association is supporting the ACTU’s call for 7 per cent, arguing its members are experiencing hardship that has surpassed the global financial crisis, and retail profits mean they can afford a real wage rise.

The ARA submission, spearheaded by chief executive Paul Zahra based on membership consultation, said it supported a “sustainable increase” that helped retail workers keep pace with rising cost of living and that it should be “based on the underlying inflation rate”.

“The ARA therefore recommends an increase of 3.8 per cent in the minimum wage to take effect from July 1, 2023 based on the current rate of trimmed mean inflation at 6.9 per cent less the 0.5 per cent increase in superannuation and less the projected 3.1 per cent decline in inflation through 2023-24,” it said.

“We believe an increase of this magnitude strikes the balance between an employer’s ability to keep pace with the rising costs of doing business, against an employee’s expectation that wages grow in line with prices.”

It follows Australian Chamber of Commerce and Industry calling for a 3.5 per cent increase – its highest in decades – and the Australian Council of Trade Union pushing for a record 7 per cent increase.

The Consumer Price Index as of the December quarter was 7.8 per cent, with underlying inflation at 6.9 per cent. But monthly CPI indicators suggest headline inflation fell to 6.8 per cent in February.

The ARA said it would update its claim when the March figures are released but it argues the Fair Work Commission should not base its decision just on past inflation rates but also the year ahead.

It cited Reserve Bank forecasts that underlying inflation will fall to 4.3 per cent by the end of the year and 3.3 per cent by June 2024.

Worker ‘despair’ worse than GFC

However, the SDA said that a study by University of Wollongong Associate Professor Martin O’Brien found the proportion of retail employee households assessing themselves as “just getting along” and “poor” had increased from 26 per cent to 30 per cent in 2022.

“The SDA has not seen in any recent past decades, this level of hardship among its members,” the union’s submission said.

“Not even the GFC caused such significant distress or despair from members.”

A female assistant department manager described herself to the union as “working poor” and said mortgage, car and phone bills took up her entire pay.

Another 55-year-old female retail worker quoted in the submission said she was now paying bills in instalments and her situation was “desperate”.

The SDA points out that the top 10 retailers’ earnings before interest and taxes grew by 51 per cent since 2019 and sales grew for eight of them last year.

However, the ARA warns anything higher than 3.8 per cent should be offset by productivity gains to reduce inflation risks and avoid “over-stretching smaller retailers who have limited reserves to incur higher labour costs, in addition to higher costs of doing business”.

The ARA said there were early indications that economic growth was slowing, with retail reporting the first month-on-month declines in trade for more than a year in December 2022.

“Analysts report that retail sales volumes are flat and that growth in retail trade is being driven by increases in prices, not volumes,” it said.

According to an ARA survey of 141 members, nearly 75 per cent had passed on higher costs to consumers as higher prices but more than 50 per cent said they had suffered higher prices by reducing margins.