AI is reshaping work, pay and employee experience of the workforce
MELBOURNE, January 27, 2026 — Salary budgets in Australia are expected to remain stable at 3.5% in 2026 across key industries, the same as the actual salary budget increase for 2025. Inflation expectations have regulated across many economies, reducing the need for reactive pay increases and instead allowing companies to plan proactively. That’s according to the latest Salary Budget Planning Survey from leading global advisory, broking and solutions company, WTW (NASDAQ: WTW).
| Industry in Australia | 2025 Actual salary increases | 2026 Projected salary increases |
|---|---|---|
| General Industry | 3.5 | 3.5 |
| Aerospace & Defense | 3.9 | 3.5 |
| BioPharma and Life Sciences | 3.5 | 3.5 |
| Construction & Engineering | 3.5 | 3.5 |
| Energy & Natural Resources | 3.5 | 3.5 |
| Financial Institutions | 3.5 | 3.5 |
| Insurance | 3.6 | 3.5 |
| Retail and Manufacturing | 3.5 | 3.5 |
| Technology/ Media/ Telecommunications | 3.5 | 3.4 |
Across industries, pay increases in Australia have stabilised signaling cautious optimism amid ongoing economic uncertainty. At the same time, WTW’s compensation intelligence continues to show clear industry differentiation in the country.
Based on its market competitiveness index where the annual base salaries of jobs across industries were ranked against the base salary of jobs from the General Industry, WTW’s 2025 compensation data shows that companies in the Financial Services sector remains the highest paying sector. This was closely followed by Renewable Energy and Technology, reflecting the sustained competition for digital, analytics and industry-specific technical skills.
“Employers are entering 2026 with clearer pay priorities and stronger discipline, using salary budgets not simply as financial inputs but as strategic levers. Yet beneath the steady medians lie meaningful shifts in how organisations allocate pay, manage complexity and plan for a workforce that continues to evolve faster than traditional budgeting cycles,” said Evangeline Daquilanea, Head of Work & Rewards, Australia and New Zealand, WTW.
“Understanding these shifts is critical to building a workforce that is not only future-ready, but resilient, competitive and human-centered.”
Evangeline Daquilanea | Head of Work & Rewards, Australia & New Zealand
“The workforce landscape is also undergoing one of the most significant transformation in decades. Artificial intelligence (AI), automation and digital platforms are no longer emerging technologies. They are now core drivers of how work is designed, valued and experienced. For HR leaders across Australia, understanding these shifts is critical to building a workforce that is not only future-ready, but resilient, competitive and human-centered.”
One of the most visible impacts is at the entry level. According to WTW’s data from 2023 to 2025, the number of new hires for entry level professionals in Australia has been declining from about 5,720 in 2023 to 4,640 in 2025.
Entry-level administrative and operational roles are decreasing as AI takes over these tasks, including those that once helped early-career professionals gain experience. At the same time, demand for AI-related skills is industry agnostic. These include skills such as data analytics, machine learning, automation design and digital ethics.
“AI, automation and digital platforms are accelerating changes to workforce structures, with routine and transactional tasks increasingly automated. The demand is also growing for roles requiring digital fluency, complex problem-solving and judgement. As a result, entry-level roles are evolving, while competition for AI-adjacent skills continues to drive wage premiums across key industries,” added Evangeline.
Based on WTW’s survey, staff voluntary turnover rates have also continued to drop (moving from 12% to 10%) over last year in Australia, with companies directing limited budget capacity towards retaining critical talent and addressing pay compression where it is most acute. Other staff retention actions included increasing use of training opportunities, improving employee experience, making changes to health and wellness benefits, greater workplace flexibility and changes to compensation programmes.
In this environment, data-driven compensation intelligence is becoming essential for maintaining competitiveness while balancing internal equity and cost discipline.
At the same time, employee expectations around flexibility, mental health and sustainable workload remain high. Flexible work and wellbeing support are now core elements of the employee value proposition, rather than a discretionary benefit. AI-enabled tools are increasingly being used to support workload optimisation, flexible scheduling and more personalised employee experience.
“AI is not replacing HR judgement,” Evangeline said. “It is augmenting it – enabling HR leaders to move faster, make better decisions and deliver more equitable and sustainable workforce outcomes.”
A total of over 800 companies participated in the Australia Salary Budget Planning Survey conducted in December 2025. These included organisations in: Financial Services; Tech, Media & Gaming; Aerospace & Defense, Construction & Engineering; BioPharma & Life Sciences; Energy & Natural Resources; Retail and Manufacturing and others.
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