Wage growth stagnates at 2.3 per cent despite a jump in public service pay


Updated

August 14, 2019 13:35:35

Australia’s wage growth continues to flatline at an annual pace of 2.3 per cent, propped up by a surprise lift in public sector pay.

Key points:

  • Annual wage growth remained steady at 2.3pc for the second successive quarter
  • Wage rises in the public sector, particularly in Victoria’s hospitals, underpinned the result
  • Western Australia continues to have the weakest wage momentum, up just 1.6pc over the year

Over the June quarter, the seasonally adjusted wage price index rose by 0.6 per cent, with a 0.8 per cent increase in the public sector more than compensating for a disappointing 0.5 per cent increase in the private sector.

“The most significant contribution to wage growth this quarter came from the public sector component of the health care and social assistance industry, where a number of large increases were recorded in Victoria under a plan to ensure wage parity with other states,” Australian Bureau of Statistics chief economist Bruce Hockman said.

Healthcare workers are leading the pack on wage increases, seeing their pay packets (excluding bonuses) up 3.3 per cent for the year.

Where you are looking for work also is a big determinant on wage growth, with Victoria continuing to outpace the likes of Queensland and New South Wales — both sitting on the national average of 2.3 per cent growth.

Victorian workers continue to enjoy the strongest wage rises, up 0.7 per cent over the quarter and 2.9 per cent for the year.

South Australia, Tasmania and the Northern Territory recorded the lowest quarterly rise of just 0.2 per cent, although Western Australia brings up the rear in annual terms with wages growing a very weak 1.6 per cent.

Asia-Pacific economist at global job site Indeed, Callam Pickering said wage growth remains quite low across almost every state and industry, with only small pockets of genuine improvement.

“The one saving grace for households is that inflation has been even lower than wage growth,” Mr Pickering said.

“Adjusted for inflation, wages rose by 0.8 per cent over the past year. For context, real wage growth has averaged just 0.2 per cent over the past six years.”

Mr Pickering said it was unlikely wages would pick up much in the short term, given the slackness in the jobs market.

“With the unemployment rate at 5.2 per cent and underutilisation rate at 13.5 per cent there is still a huge amount of slack across the labour market, ” he said.

“The underutilisation rate needs to ease towards 12 per cent before wage growth of 3 per cent or higher is likely. That won’t happen overnight nor is it likely within the next year.”

Topics:

industrial-relations,

work,

economic-trends,

business-economics-and-finance,

unemployment,

money-and-monetary-policy,

australia

First posted

August 14, 2019 12:22:11



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