Pessimists rule as wage growth stays slow

Wednesday, 15 Nov, 2017

The rise in the national Minimum Wage has an impact in the September quarter Wage Price Index.

"But wage earners are still adjusting to the "new black" of wage growth near two per cent rather than 3.5-4.0 per cent", he said.

This was up from 1.9 per cent in the past few quarters but was still lower than expected.

Year-over-year, wage prices gained in the last quarter, compared to expectations for a 2.2% gain. "The higher wage growth in the September quarter was driven by enterprise agreement increases, end of financial year wage reviews and the Fair Work Commission's annual minimum wage review", said ABS chief economist Bruce Hockman.

Across the nation, wages grew by 0.5 per cent quarter on quarter for a year on year increase of 2 per cent.

In the public sector, public administration and safety had the strongest quarterly growth of 1.2 per cent, while workers in electricity, gas and water were among those with the lowest increase of 0.5 per cent. The retail sector, for example, saw wage growth slow from 1.8 percent y/y in Q2 to 1.6 percent in Q3. Those for private sector workers increased by a larger 0.54%.

The Australian wage growth is expected to creep higher over the coming years as spare capacity in the labour market is gradually being eroded, job insecurity has fallen, and businesses are reporting some pockets of difficulty in finding suitable labour, ANZ Research reported.

And he doesn't expect there'll be any meaningful improvement in wage growth for some time yet. "But there remains a high degree of slack in the labour market and that keep wage growth relatively low for the foreseeable future", he says.