Younger workers drive wage growth in Australia's SMBs

Younger workers led wage growth in Australia's small and medium-sized business sector in June, according to Employment Hero. Workers aged 18 to 24 also recorded the only month-on-month employment increase of any age group.

The payroll and employment software company's latest jobs report found wages for 18- to 24-year-olds rose 7.6% year on year, more than any other cohort. Employment for that age group increased 0.4% from the previous month, while overall employment across the SMB sector slipped 0.1% after rising 1.2% in May.

Across the broader market covered by the report, wages rose 0.5% month on month in June, reversing a 1.6% decline in May. Annual wage growth slowed to 4.3% from 5.6% at the start of the year, suggesting pay rises are moderating after stronger gains earlier in 2026.

The figures are drawn from payroll data covering more than 23,000 businesses and 1.7 million employees in Australia. They reflect conditions in the country's SMB economy, which Employment Hero tracks through monthly first-party payroll records.

Cooling trend

The data points to a labour market that remains relatively steady but is losing momentum. June's small decline in overall employment followed a stronger result in May, while annual wage growth eased even as monthly pay growth returned to positive territory.

Younger workers stood out against that backdrop. Their gains in both wages and employment contrasted with weaker results elsewhere, making them the only age cohort to add jobs over the month.

Employment Hero linked some of that wage strength among younger staff to employer behaviour ahead of the national minimum wage increase that took effect at the start of July. That suggests some businesses adjusted pay before the deadline, although the report did not show how much of the increase came from award-reliant or minimum wage roles.

Regional variation was also evident in the June figures. The Northern Territory recorded the strongest employment growth at 2.9% month on month, while the Australian Capital Territory posted the largest decline at 1.3%.

Hiring patterns

The report offers another sign that smaller-business employers are balancing hiring needs against cost pressures. While job levels have moved within a relatively narrow range over the past year, the latest month suggests a more cautious approach than earlier in the year.

This matters because smaller businesses account for a large share of employment in Australia and can provide an early read on shifts in hiring, wage pressure and business confidence. Changes in this part of the labour market can also show where competition for staff is strongest, particularly in entry-level and lower-paid roles often filled by younger workers.

James Keene, APAC Managing Director at Employment Hero, said the June results showed resilience even as momentum faded.

"June's results suggest Australia's SMB labour market remains resilient, although hiring momentum has softened following a strong May," Keene said.

He also highlighted the strength of younger workers in the latest figures.

"One of the standout findings this month was the continued strength of younger workers. Employees aged 18-24 were the only age group to record employment growth in June and also led the nation in annual wage growth, underscoring the important contribution younger Australians are making to workforce growth across the SMB economy.

"With last month's ABS labour force figures indicating positive employment growth, next week we expect results will remain broadly steady, led by younger workers entering Australia's SMB workforce," Keene said.

The June reading adds to evidence that wage pressures in the SMB sector have not disappeared, but are less intense than they were at the start of the year. The strongest increases now appear concentrated among younger workers, while total employment growth has flattened.

The report is based on aggregated payroll data rather than survey responses, giving Employment Hero a direct view of wage and headcount changes among businesses on its platform. The dataset covers 1.7 million employees, making it one of the larger private snapshots of labour conditions in Australia's SMB market.