2025: Why Your Salary Sucks, Top Talent Can’t Get Hired, and the Economy is Crushing Your Career

2025: Why Your Salary Sucks, Top Talent Can’t Get Hired, and the Economy is Crushing Your Career

As 2025 churns ahead at full speed, I’m hearing three consistent themes in my conversations. Interestingly, all three topics tend to pop up over a single coffee, but as separate issues rather than the interconnected challenge that exists. As the title alludes, these are:

  • Despite a lot of salary bumps in the past 12 months, most people can’t feel the tangible impact on their cost of living, and savings are depleted.
  • Highly experienced talent are struggling to re-enter the workforce, despite opportunities in the employment market.
  • Everyone is debating the hot topic of AI—people are either TERRIFIED of it or embracing it.

Those who know me know I’m a Psychologist by trade, but a macro-trends nerd by nature. I try to see the patterns in complex trends and make them meaningful to people’s experiences—whether that’s employers struggling to hire or individuals feeling stuck in the hurt locker. So, I’m here to share my breakdown of what I’m seeing, and hopefully, it adds value to your own journey.

Firstly, All the Feels

If it feels like your paycheck hasn’t been stretching as far as it used to, you’re not imagining things. Over the last few years, Aussies have faced a perfect storm of rising costs, sluggish wage growth, and declining productivity—shaping the reality of our earning power today.

But here’s the kicker: it’s not just about inflation. Highly experienced professionals are struggling to land jobs, despite glowing resumes. Many blame ageism or being “overqualified,” but what if the real issue is that businesses are struggling to justify higher wages in a low-productivity economy? If companies aren’t making more from each worker, how can they afford to pay more for top talent?

(P.S. Don’t come at me—I’m not saying people are lazy! In fact, the number of hours worked by Aussies has exploded in the past two years!)

At the same time, there’s a growing fear of AI replacing jobs, when in reality, AI is becoming a career accelerator. The people who leverage AI in their work are standing out to employers—not being replaced. Yet many job seekers are still treating it like a threat instead of the ticket that could give them an edge.

The job market is shifting fast, and wages aren’t keeping up the way they used to. But there’s still a way forward. I’m no economist but I love a good story, so I’m going to break down (the only way I know how) what’s really been happening to wages, inflation, and productivity since 2021—and more importantly, what you can do about it. Let’s go!


What is Real Wage Growth (and Why Should You Care)?

Most people focus on whether they’re getting a pay rise. But what really matters is whether that pay rise actually improves your financial situation.

This is where Real Wage Growth comes in.

  • If wages rise faster than prices (inflation), your real wage goes up—meaning you can buy more with your paycheck.
  • If wages rise slower than prices, your real wage goes down—you’re effectively taking a pay cut, even if your salary goes up on paper.

To measure this, we look at two economic numbers:

  • Wage Price Index (WPI) – Tracks how much wages are increasing.
  • Consumer Price Index (CPI) – Tracks how much the cost of living (inflation) is rising.

When WPI (income) outpaces CPI (cost), we feel financially better off. When CPI outpaces WPI, it gets harder to keep up with living costs (feel familiar??).


What Happened from 2021 to 2024? The Rollercoaster

Let’s take a walk through the hot-mess that were the last three years and how they’ve shaped our financial reality.

2021 – The Calm Before the Storm

In early 2021, wages were growing modestly, and inflation was relatively stable. People weren’t feeling massive changes in their spending power and we were feeling good post COVID-lockdowns. FREEDOM!

Then things changed—fast.

2022 – Inflation Takes Off, Real Wages Dive

By mid-2022, inflation skyrocketed. Supply chain issues, global instability, and post-pandemic economic shifts pushed up the prices of essentials—food, fuel, rent, you name it.

CPI (costs) shot up at a much faster rate than WPI (income), meaning that even if you got a pay rise, it likely wasn’t enough to keep up with rising costs. This led to negative real wage growth, as seen in the graph. Essentially, we were working just as hard (or harder) but felt poorer.

2023 – Wages Start Catching Up, but the Damage is Done

As inflation cooled in late 2023, wages began to rise faster, helping to close the gap. However, this didn’t erase the financial pressure we had been under for nearly two years.

Many had already dipped into savings, taken on debt, or adjusted their lifestyles just to keep up. The damage from the wage-price gap was in full-effect.

2024 – A More Balanced (But Still Challenging) Reality

As of 2024, WPI and CPI are more closely aligned. Wages are rising at a healthier pace, and inflation has cooled—but for many, the real income lost between 2022 and 2023 hasn’t fully recovered.


The Hidden Factor: Productivity & Your Paycheck

So why haven’t wages surged higher? One major reason: labour productivity is falling.

Labour productivity = Economic output per hour worked.

Higher productivity means businesses can afford to pay higher wages. But since 2016, Australia’s productivity growth has been declining, and it dropped even further after the pandemic.

When productivity falls, businesses struggle to increase wages without raising prices—causing a cycle of stagnation.

The bottom line? If productivity doesn’t improve, real wages will struggle to grow sustainably.


What Can You Do?

The reality is most first-world countries are struggling with productivity. It would take radical Government policy change to fix it. If businesses can’t rely on that top-down change to boost productivity growth, then the only way to fuel wage increases is bottom-up - that is, to take control of our own career and earning potential by becoming more productive.

At an individual level this means the key is to focus on:

·???????? High-Value Skills – Automation, AI, data, leadership, and financial skills are in demand.

·???????? Strategic Career Moves – Don’t just wait for the raise that isn’t coming—consider industry shifts, upskilling, or negotiating smarter.

·???????? Work Smarter, Not Harder – Embrace AI and streamline processes to stand out in job applications and make yourself indispensable.

If you want a deep dive into practical steps behind these, check out my post Why You’re Top Talent but Have No Value (4 Ways to Change It).


Well, if you've that made it this far - thanks for the ride! There's no doubt the last few years have been tough on our wallets, but while economic forces shape the landscape, your financial future is still in your hands.

Drop a comment below—I’d love to hear your perspective!

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Linda Hudson, Director

Managing Director @ Good People | I collaborate with Accounting Firms & CFOs to customise the best talent solution for their team.

3 周

Thanks for sharing your insights, Matt. Human + AI = Best outcomes in my view from a finance and recruitment perspective. Always love hearing from you. ?

Vivianne Arnold

AI-Driven Marketing Strategist ? AI & ChatGPT Innovator ? Sales & Marketing Leader ? Transformative Workshops

4 周

Brilliant! Totally agree with ‘The people who leverage AI in their work are standing out to employers—not being replaced’ Thanks Matthew

Caleb Sweeney

Linear Accelerator Engineer at GenesisCare

4 周

Great read Matt, very insightful

Holly Brailsford

Helping organisations to create a culture of mentoring | Co-founder of Brancher | Organisational Psychologist

4 周

Great read Matthew Callow

Thomas Hodgkinson

Experienced Medical Device Professional who is passionate about innovative technology and business models

4 周

I have no empirical data, but I wonder if the falling productivity rate is correlated with the fall in real wage growth - ie people feel they have less money, so they tighten discretionary spending, in turn leading to a lower productivity rate…. Nasty spiral to get out of!

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