Is wage inflation being underestimated

In recent times, the cost of living in Australia has grown faster than salaries, meaning ‘real’ wages have gone backwards. We believe this is about to reverse as the lagging effect of Australia’s employment regime abates. This should fuel material wage inflation over the next 6-12 months despite signs that the labour market may be softening. As a result, we expect to see Australian small cap companies increasingly divide between those that can cope with rising wages using pricing power, cost cutting and/or productivity initiatives – and those that can’t.

Is wage inflation being underestimated by the market?

A consistent theme coming through for most sectors across the Australian small cap universe is wage inflation. We believe wage inflation is trending higher, however this is yet to materially show up in official government statistics, which currently show wage growth tracking below the Consumer Price Index (CPI).

Australian wage and consumer price inflation (% p.a.)

Phillip Hudak
Co-Portfolio Manager, Australian Small Companies

Co-Portfolio Manager, Australian Small Companies

Phillip Hudak

BBus, CFAPhillip Hudak joined Maple-Brown Abbott in April 2022 as Co-Portfolio Manager for Australian Small Companies, bringing over 24 years’ investment experience, with 15 years dedicated to Australian small cap equity portfolio management and fundamental stock research. In his current role, Phillip is responsible for leading the Australian small companies equity business, focusing on medium-term earnings delivery combined with a differentiated market-leading sustainability framework which is designed to outperform in most market environments.Before joining Maple-Brown Abbott, Phillip worked as Co-Portfolio Manager on the AMP Capital Australian Emerging Companies Fund for nine years. Prior to that, he was a small companies analyst at ING Investment Management, analyst at MIR Investment Management and an investment consultant with Russell Investment Group.

Investment Insights

Article 3 Nov 2026

8 min

Australian small caps: a coiled spring so far this AGM season

Australian small caps performance is trailing large caps on an annualised basis by one of the widest margins, a gap seen only three times since 2002, and each time small caps recovered sharply once pressure eased. Phillip Hudak, Co-Portfolio Manager, Australian Small Companies, shares 10 key investment insights from the Annual General Meeting (AGM) season so far. He also unpacks four investment themes shaping the Maple-Brown Abbott Australian Small Companies Fund and the five key catalysts he believes could release the coiled spring for Australian small caps.

by Phillip Hudak

Co-Portfolio Manager, Australian Small Companies

Article 7 Oct 2026

1 hour min

Dougal Maple-Brown’s shocking prediction

At Livewire Live, Dougal Maple-Brown, Head of Australian Value Equities, made a two-part "shocking prediction": CSL would double from its lows and Commonwealth Bank (CBA) would halve from its highs. Before he even took the stage, CSL had all but doubled from its May low of ~$90. Find out why Dougal believes valuation is behind both calls, why CBA could fall to $100 a share, and why we are overweight healthcare for the first time in decades.

by Dougal Maple-Brown

Head of Australian Value Equities

Article 30 Sep 2026

8 min

Data center growth in Iberia

In the current environment of strong and growing electricity demand, the nature of investment opportunities continue to evolve. On our September research trip to Portugal, Spain, the UK and the US, we found two opportunities we believe the market is under-appreciating. Europe’s data center growth is happening in Iberia; while battery storage investments are generating attractive returns for developers and addressing customer affordability for US regulated utilities. Read the full insights to see what we learned on the ground.

by Andrew Duong

Portfolio Manager, Global Listed Infrastructure

Article 7 Aug 2026

18 min

2026 Australian Small Companies ESG Report

The environment for responsible investment continues to evolve, and in certain markets the debate surrounding ESG has become increasingly polarised. Our position remains unchanged. We focus on the environmental, social and governance factors that are financially material to the companies held in the Fund, and on the management of those factors in the long-term interests of our investors. Where third-party coverage of the smaller end of the domestic market is thin, proprietary research and direct engagement with boards and management become the means by which that view is formed. Our ESG report for the Maple-Brown Abbott Australian Small Companies Fund records both over the 2026 financial year.

by Ayesha Azeem

Senior ESG Investment Analyst