Teachers, bankers, plumbers and electricians have sprinted ahead of the pack with decent pay rises over the past three months, despite the national workforce’s pay nearly flatlining.
Other sectors battered by the aftershocks of the pandemic saw minimal rises or a complete reversal in fortunes.
But workers from all industries have been warned to expect wages to stagnate for the next six months, as Australia grapples with high levels of unemployment and tapered government support for businesses.
ABS data shows wages increased 0.1 per cent over the September quarter and 1.2 per cent over the previous 12 months – marking the slowest quarterly and annual wages growth in recorded history.
Over the quarter, the largest gains were in health care and social assistance (up 0.8 per cent), construction (up 0.7 per cent), utilities (0.6 per cent), financial services (0.6 per cent) and transport, postal and warehousing (0.6 per cent).
Meanwhile, retail (up 0.1 per cent), rental, hiring and real estate services (0 per cent) and administrative and support services (down 0.3 per cent) saw some of their worst wages growth in recent history.
AMP Capital chief economist Dr Shane Oliver said it was no surprise that those sectors were among the hardest hit.
“These figures partly reflect the nature of the shock,” Dr Oliver told The New Daily.
“These were the industries on the front line of coronavirus shutdowns, and with a lot of contractors in some of these sectors, they would not have been getting their normal level of work.
“In terms of those that grew the most over the last 12 months, especially health care and education, they tend to be more public sector-dominated and public sector growth was certainly stronger.”
Some positives amid the slowdown
Commsec senior economist Ryan Felsman said despite the widespread freezing of wages, green shoots were emerging in the economy with surging demand for labourers, machinery operators, community and personal service workers, and tradesmen.
With inflation at lower levels, Mr Felsman said most workers who have retained jobs may still see real rises in their pay, noting annual wages growth in all states except Tasmania had outstripped inflation.
But he said cash-strapped business owners would likely hold onto their money until the economy was in a stronger position – meaning wages could flatline in the final three months of 2020.
“The virus shock, high unemployment and spare capacity in the labour market mean that wage freezes have become more widespread across the private and public sectors of the economy,” Mr Felsman said.
Where to from here?
Dr Oliver said essential workers – including healthcare workers and educators – should receive decent pay rises as demand for their services remains resilient during the pandemic.
On the other hand, bank and insurance workers should brace for pay rises to lose steam as weakness in other parts of the economy starts filtering into the financial sector, he said.
Initially, financial services weren’t affected as it’s not something people cut back their demand on by getting rid of their insurance, but there will be an impact on wages in the next six months or so,” Dr Oliver said.
Wage rises would continue to slow for hospitality workers, he said, while the shift to online shopping may see retail workers’ wages enter “a bit of a rollercoaster period” as shopper demand rises before Christmas.
But the biggest gains in the near term could come in mining.
“Mining investment is one of the key areas picking up in the economy. We’ve gone through a long period of slumping mining investment following the end of the mining boom about seven years ago,” Dr Oliver said.
“You can see it in stats coming out of WA: It went from a period of massive unit oversupply, high vacancy rates and falling rates to now a period of undersupply, lower vacancy rates and rising rents, and retail data coming out of the state is also looking better.”