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Aussie workers’ long wait for pay rise continues as wage growth remains weak

JobSeeker will be permanently boosted by $50 a week when the coronavirus supplement ends in March.

JobSeeker will be permanently boosted by $50 a week when the coronavirus supplement ends in March. Photo: Getty

The long period of weak wage growth has shown no sign of ending, as official figures show average wages increased by just 0.5 per cent in the three months to September.

That put annual wage growth at 2 per cent – just above the annual rate of inflation of 1.8 per cent.

The wage price index figures, released by the Australian Bureau of Statistics on Wednesday, were identical to the previous quarterly figures, and continued a nearly two-year run of weak wage growth, around the 2 per cent mark.

At the height of the mining boom, by contrast, wages were often growing at rates of more than 4 per cent a year.

Public sector wages continued to grow at a faster rate than private sector wages.

On average, someone working for the public sector saw their pay go up by 2.4 per cent over the year to September.

A private sector worker, on the other hand, only received a pay rise of 1.9 per cent, 0.1 of a percentage point above the consumer price index (CPI) of 1.8 per cent.

The CPI is the official measure of inflation.

Wage growth was strongest in Victoria, Queensland and Victoria, which all saw a 2.2 per cent rise. It was weakest in Western Australia, where wages grew by just 1.3 per cent, well under inflation.

Western Australia’s lacklustre result correlated with weak wage growth in the mining sector, the industry that dominates in WA.

Mining saw insipid wage growth of just 1.2 per cent for the year.

Healthcare, arts and recreation services saw the strongest wage growth, at 2.7 per cent.

The results, though disappointing, were expected. Last month Reserve Bank of Australia governor Philip Lowe predicted low wage growth would continue for “for a while yet”.

And last week, the RBA acknowledged that a shift to lower-paid work was a structural issue that could be keeping wages down.

Callam Pickering, APAC economist for global job site Indeed, said the latest wage price index was “disappointing”, and predicted it would continue for the “foreseeable future”.

“Private sector wages have increased by just 1.9 per cent over the past twelve months – barely keeping pace with inflation – despite improved business conditions and corporate profitability,” he said.

“Growth remains weak across every Australian state, particularly in Western Australia, with wages rising by around or just above 2 per cent in most states.

He said wage growth was “key” for the Australian economy.

“It’s the key for monetary policy, the key for inflation, and the key for improved retail spending. Stronger business conditions and lower unemployment should, in time, lead to higher wage growth,” he said.

But he said a “high degree of slack” in the labour market could keep wage growth “relatively low” for some time.

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