Why your salary hasn’t increased in 2025 and what you can do about it
As we progress through 2025, many professionals across Australia and New Zealand have noticed little to no change in salaries for their job titles compared to the previous year. Despite ongoing skills shortages in some industries and the increasing cost of living, wage growth has remained sluggish. So, what does this all mean?
Economic stability leading to salary correction
The rapid wage increases seen post-pandemic, particularly in high-demand industries, are now stabilising. Employers who once felt pressured to offer inflated salaries to attract talent are now adjusting to more sustainable pay structures.
As Katie Kemp, Senior Consultant at Talent Wellington, explains, "I would suggest that salaries are self-correcting. The pandemic and the perception of people scarcity has passed as the market turns to favour employers; so, rather than flattening, we are seeing salaries come to be more realistic and in line with the expectation of the role and a candidate's experience."
Wage growth slowing across the board
According to the Australian Bureau of Statistics, public sector wages rose by only 0.8% in the December quarter of 2024, a significant slowdown from previous years. Additionally, the Australian Industry Group forecasts wage growth to decline steadily from 4.1% to 3.9% by the end of 2025-2026.
However, as Edwin Foo, Principal Account Manager at Talent Perth shares, "I don't foresee IT salaries decreasing despite the measured slow-down in annual wage growth. More notably rather, IT roles and positions that become less in demand during the course of 2025-2026 will likely remain stagnant, whilst in-demand skill sets within areas of Cybersecurity, Data Science, Artificial Intelligence and Machine Learning for example, will continue to trend upwards due to ongoing shortages, and so depending on the IT specialisation, the wage growth experienced will be relative."
Inflation and interest rates are pressuring businesses
The Reserve Bank of Australia (RBA) expects inflation to return to the target range of 2-3% by 2025-2026. While this is positive for economic stability, many businesses are still dealing with higher operational costs, borrowing expenses, and cost-cutting measures, reducing their ability to offer significant pay raises.
Alan Dowdall, Practice Lead at Talent Sydney, shares, "While niche tech skills remain in high demand which calls for competitive rates, overall, salaries remain flat. Clients are consistently asking for salary and market insights to ensure they're getting value for money, and that seems to be the attitude for most employers who need to stick to their budgets."
Contracting market shifts & changing job preferences
Another factor impacting salary trends is the shift from contract hiring to permanent and fixed-term staffing. While contract roles were lucrative during the pandemic, fewer opportunities are currently available with many professionals accepting permanent roles with steadier and often lower salaries.
As Jacaleen Williams, Senior Consultant at Talent Wellington, explains, "There's a mix in the market in terms of expectation and reality. Some areas saw salaries inflated/over-inflated around COVID times, and there is some flattening happening now. The decrease in contracting opportunities has seen people need to switch back to permanent or fixed-term positions."
So, what can professionals do?
Edwin states that "the lesson here, is for IT candidates to remain on the front foot when it comes to upskilling themselves, and pivoting pathways if need be, in order to ensure that they are future-proofing their careers and maximising the salaries that they earn."
If you're facing salary stagnation, consider:
- Upskilling in in-demand areas like data analytics, cybersecurity, and cloud computing
- Negotiating perks like bonuses, additional leave, or professional development funding
- Explore new opportunities where demand for your skill set remains high
While large salary increases may not be as common as before, the key to career growth in 2025 is adaptability. Being equipped with the right skills and market knowledge will put you in the best position for future pay rises.
For more of the latest information on the hiring market, top salaries, skills in demand, and more, head to our More than Money Salary Guide 2025.
