Australian wages have experienced their most sluggish annual growth on record, as the coronavirus pandemic continues to see businesses shy away from increasing their workers’ pay.
The Australian Bureau of Statistics’ Wage Price Index (WPI) found the average worker’s wage increased at the snail’s pace of 0.1 per cent over the September quarter – the weakest climb in recorded history.
And the latest findings also showed Australian pay packets had their weakest-ever 12-month period, rising only 1.2 per cent.
It follows the June quarter’s previous 22-year record-low growth, where pay only rose by a marginal 0.2 per cent.
What’s more, the figures do not factor in the hundreds of thousands of newly-unemployed and workers on JobKeeper who have suffered hits to their income, as they are a like-for-like comparison of wages doled out by employers.
ABS head of price statistics Andrew Tomadini said the September quarter – typically the period where wages grow the fastest – was weighed down heavily by the ongoing economic ramifications of the pandemic.
“Organisations continued to adjust to the economic uncertainty, recording fewer end of financial year wage reviews and delaying enterprise bargaining agreement increases,” Mr Tomadini said.
Mr Tomadini also suggested the staggered implementation of the Fair Work Commission’s annual wage review has pushed some of those usual September quarter wage rises to later in this financial year.
Public sector wages rise faster than private
Public sector workers experienced marginally higher wage growth through the first three months of the 2020-21 financial year, up 0.2 per cent (and 1.8 per cent over 12 months) compared to the public sector’s 0.1 per cent growth (1.2 per cent over 12 months).
Victoria’s long-winded lockdown was reflected in its performance, with wages rising just 1.2 per cent over the past year, while New South Wales fared slightly better with a 1.4 per cent rise.
South Australia, Western Australia, the Northern Territory and the ACT experienced annual growth of 1.5 per cent.
Breaking the figures down into separate sectors, the index showed some of the most in-demand industries in the pandemic concurrently saw some of the largest growth in salaries.
Health care and social assistance workers’ wages increased by 0.8 per cent and construction salaries rose 0.7 per cent over the September quarter – while bankers’ pay packets increased by 0.6 per cent.
And teachers, many of whom returned to in-class teaching during eased restrictions, saw their pay rise 0.5 per cent in the last three recorded months.
But hospitality – which has been ravaged by widespread shutdowns and strict patron capacity limits as the economy reopened – had wages growth of just 0.4 per cent over the year.
Callam Pickering, APAC economist for jobs listings website Indeed, noted that 11 out of the 18 industry groups captured under the index are now witnessing their lowest wage growth since data was first collected in 1997.
He said that stagnant wages growth, which has become one of the economy’s greatest hurdles since 2013, would continue to drag down Australia’s post-pandemic recovery.
“As the impact of JobKeeper and JobSeeker diminishes, the burden of the COVID-19 crisis shifts back towards households and businesses and low wage growth will become more damaging,” Mr Pickering said.
“High levels of unemployment and underemployment, along with inadequate domestic demand, creates a poor environment for wage growth.”
BIS Oxford Economics chief economist Dr Sarah Hunter said the data confirmed the RBA’s opinion that it would need to keep interest rates at record lows until late-2023, when the jobs market is anticipated to fully recover and inflation returns to its target band of 2-3 per cent.
“Pressures are likely to remain weak until the recovery in employment is largely complete – this will take quite some time, given that over 400,000 jobs have yet to return,” Dr Hunter said.