Workers have already seen some let-up in prices eroding hard-won pay gains and new Treasury forecasts suggest the gap between inflation and wages will widen.
The 2025/26 budget predicts real wages will grow by a quarter of a percentage point more than predicted in December's mid-year budget update.
Pay packets will expand by three per cent in 2024/25 and pick up in coming years to 3.75 per cent in 2028/29, the budget released on Tuesday night shows.
Wages have been growing in line with a strong labour market, with the unemployment holding well below the historical average of 6.30 per cent since 1972, despite high interest rates.
Forecasts in the budget show unemployment stabilising at 4.25 per cent - a tad higher than the 4.1 per cent annual rate logged by the Australian Bureau of Statistics in February.
However, employment growth looks soft, ranging between 2.75 per cent this financial year and 1.5 per cent by 2028/29.
The Labor government's fourth budget, the last before the election due May 17, also showcased its plan to stop employers from imposing non-compete clauses from 2027, which could lift wages by as much as four per cent.
Non-compete clauses prevent or restrict workers from moving, or attempting to move, to a competing employer, and research suggests they are becoming common for lower-paid workers, such as hairdressers and childcare workers.
The plan impacts low and middle income workers earning less than $175,000 a year.
Aged care workers are on track for pay rises from March this year following the Fair Work Commission's decision to boost wages in the sector, with an extra $2.6 billion set aside the budget.
Electricians will be the first profession to benefit from a national licensing scheme designed to make it easier to move across states and territories.
Electrical trades will be used as a template for other occupations.
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