Data yesterday confirmed that Australian salaries were falling even before the COVID-19 and associated lockdowns and job losses struck in late March.
Figures from the Australian Bureau of Statistics (ABS) show the Wage Price Index rose an unchanged 0.5% in the three months to march for an annual rate of 2.1%.
The quarter on quarter rise of half a per cent was steady over the four quarters to March, but wage growth fell to an annual rate of 2.1% from 2.2% in December (and 2019) and 2.4% a year ago.
Public sector wages grew at a slightly faster rate than private-sector ones, at 0.5% compared to 0.4%.
The ABS said the data for the survey was collected mid-month in March quarter, ahead of the social restrictions and business closures imposed in late March to check the spread of coronavirus.
Across industries, annual wage growth in March 2020 ranged from 1.6% for the information media and telecommunication services industry to 3.0% for the health care and social assistance industry (which is where the growth in jobs since 2016 has been concentrated).
Victoria recorded the highest through the year growth of 2.5% while WA recorded the lowest for the seventh consecutive quarter (1.8%) despite the strong recovery in the mining sector in the past two years, especially iron ore and LNG.
But that is now history – albeit confirmatory of the sluggishness in the wider economy before the pandemic struck.
“Wages are likely to weaken materially over the coming months as unemployment spikes and hours collapse amid the pandemic-driven recession,” NAB economist Kaixin Owyong said in a note.
The Reserve Bank of Australia is forecasting wage price index growth to slow to 1.5% by the end of 2020, while NAB forecasts even slower growth of 1.2%, Ms. Owyong said.
“A sharper-than-anticipated slowdown in wages would be an additional headwind to recovery given a sustained rebound in consumer spending is needed to return the economy to a solid footing,” she pointed out.
The NAB on Tuesday said that more fiscal help will be needed to help the recovery when it happens.