Why Wage Increases Haven’t Fixed Hiring Problems in Australia
Over the past few years, many Australian businesses have responded to hiring pressure in the most obvious way: increasing wages. On the surface, this approach makes sense. Higher pay should attract more candidates and reduce turnover. Yet across manufacturing, logistics, trades, construction, and professional services, hiring remains difficult even where rates have lifted. The reality…
Over the past few years, many Australian businesses have responded to hiring pressure in the most obvious way: increasing wages. On the surface, this approach makes sense. Higher pay should attract more candidates and reduce turnover. Yet across manufacturing, logistics, trades, construction, and professional services, hiring remains difficult even where rates have lifted.
The reality is that wages alone are no longer solving recruitment problems. The labour market has changed, along with workplace behaviour.
Wage Growth Didn’t Keep Up With Reality
Between 2016 and 2020, wage growth in Australia remained low but relatively stable. Employment levels were strong, but real income gains were limited. Productivity growth was weak, and improvements in living standards were modest. The real shift occurred between 2022 and 2024. Inflation rose tight, driven by housing, energy, and essential costs. While wages did increase, they didnt keep pace. The result was the largest real wage decline seen in decades.
By 2025 and 2026, inflation had eased and nominal wages improved. However, real wages only just began to recover, leaving many households worse off than they had been years earlier. For workers, this meant an extended period of declining purchasing power and growing financial uncertainty. That experience reshaped expectations around work and employment decisions.
Workers Became More Selective, Not More Mobile
One of the most common misconceptions in hiring today is that workers are constantly chasing the highest rate available. In practice, the opposite has occurred. After years of financial pressure, many workers now prioritise stability over short term pay increases. Predictable hours, manageable workloads, and reliable employers have become just as important as headline rates. Commute time and job location now carry significant weight, often outweighing marginal wage gains.
This shift is particularly evident in trades, logistics, and operational roles, where burnout and inconsistency were widespread during the COVID and post-COVID years. In these sectors, higher wages alone do not automatically overcome concerns around workload, reliability, or sustainability.
Housing Has Changed the Value of Money
Housing costs have fundamentally changed how workers evaluate job opportunities.
In cities like Melbourne and Sydney, rent increases have consistently outpaced wage growth. Home ownership has been delayed or ruled out altogether for many, and workers are far less willing to relocate for marginal financial benefit.
As a result, a higher hourly rate does not necessarily translate into a better quality of life. Travel time, proximity to home, and overall certainty play a much larger role in decision making. For businesses, this helps explain why roles remain empty even when pay exceeds benchmarks.
Money matters and so does location, time, and certainty.
Migration Increased Supply, Not Suitability
Strong post-COVID migration helped ease labour shortages at a broad level. However, it did not resolve all hiring challenges. Many businesses now face larger applicant pools, but with wider variation in experience, capability, and job readiness. Screening and onboarding cycles have lengthened, particularly in roles that require “hands on” experience, site familiarity, or local compliance knowledge.
In these situations, wage increases alone do not bridge the gap between availability and suitability.
Productivity Pressure Changed Employer Expectations
While candidates became more selective, employers also became more cautious.
With productivity growth remaining weak, every hire now carries greater operational risk. Poor hiring decisions are more expensive to unwind, and businesses can no longer afford high churn or underperformance.
As a result, employers are hiring more deliberately. Decision making takes longer, expectations are higher, and placement matters. This can create conflict in fast moving labour markets, especially when recruitment is left too late.
What We’re Seeing in the Trades Market Right Now: A TRS Resourcing Update from the Director
Why “Just Paying More” Stops Working
Wage increases tend to fail when they do not meaningfully offset housing and commuting costs, when role expectations are unclear, or when work environments are inconsistent. They also fail when hiring remains reactive rather than planned.
In many cases, businesses increase pay after pressure peaks, at a point where candidates already have options.
What Actually Improves Hiring Outcomes in 2026
Based on what we see daily across Melbourne and Sydney, businesses achieving consistent hiring outcomes focus on early workforce planning. They are clear about role scope and expectations, realistic about timelines, and understand where their labour pool actually lives.
They also partner with recruiters who know their market not just CVs.
The TRS Perspective
At TRS Resourcing, we work with employers who recognise that today’s hiring challenges are not temporary.
The workforce has changed structurally. Businesses that adapt by planning earlier and hiring with intent continue to secure strong outcomes, even in tight labour markets.
Wages matter. But they are no longer the whole story.
