For the second quarter in a row Australia’s wage growth has slumped to historic lows and there doesn’t seem to be anyway of reviving it.
The Australian Bureau of Statistics said yesterday said the Wage Price Index (WPI) rose by a record low of 0.1% in the September quarter. That followed 0.2% rise in the June quarter which was the previous all time low.
Over the past 12 months, the index has grown by a record-low of 1.4%, down from 1.8% in the year to June.
In the September quarter last year the index was growing at an annual rate of 2.2%.
Public and private wages rises have vanished and are now being suppressed by a combination of the coronavirus recession (and lockdowns), reluctant employers, wage tribunals trying to soften the impact on businesses, and active wage suppression by governments and some businesses.
And the outlook is glum with wage rises are heading lower and on the way to making true the forecast from of Reserve Bank Governor, Phil Lowe in a speech on Monday night that:
“In each of the next two years, we are expecting annual wages growth of less than 2 per cent. And inflation, in underlying terms, is expected to be just 1 per cent next year and 11⁄2 per cent in 2022,” Governor Lowe said.
Helping making that forecast come true is the active suppression of wage rises for 246,000 Commonwealth public servants by the Morrison government’s linking of their pay rises to those in the private sector (which are rising by just 0.1%) while nearly 400,000 NSW public servants have seen the Coalition NSW government cut its wage cap from 2.5% a year to 1.5% (but making it still far more generous than that in Canberra).
The ABS said private wages increased by an unchanged 0.1% in the quarter to be 1.2% up over the year to September (down from 1.7% in the year to June). Public sector wage rose 0.2% (down from 0.6%) to be 1.8% higher over the year, slower than the 2.1% rise in 2019-20.
And there was another example of wages falling in the quarter. The ABS said wages actually fell by 0.3% for administrative and support staff workers, which dragged the annual rate of growth to just half a per cent.
That was after the June quarter saw a 0.9% slide in the quarterly WPI for the other services sector. The ABS said at the time “This is the first quarterly fall in industry wages since the commencement of the series in September 1997.”
Most of that fall was recovered in the September quarter with a rise of 1.3%. But it still left the sector with a rise of 0.4% over six months.
But with the fall for administrative and support staff workers now we have the second industry wage fall in history of the series (in 23 years).
At a state level, private wages grew by 1.4% over the year in NSW while public sector wages rose by 1.3%. In Victoria, public sector wages rose 1.8% compared to just 1% for the private sector.
Wages for people in the real estate and rental sector were flat in the quarter and up by just 0.6 per cent over the year. Financial services and education sector wages are the strongest in the country, up by 2.4% over the year. With NSW cutting the cap, the size of that gain will fall.
In a comment with the data, Andrew Tomadini, Head of Price Statistics at the ABS said “The September quarter is generally a quarter of solid wage growth, however, the impacts of the COVID-19 pandemic contributed to a subdued rate of wage growth in September quarter 2020.
“Organisations continued to adjust to the economic uncertainty, recording fewer end of financial year wage reviews and delaying enterprise bargaining agreement increases. This led to a significantly reduced number of jobs recording wage rises when compared to previous September quarters.
“Additionally, the staggered implementation schedule of the Fair Work Commission annual wage review moved some regular September quarter wage rises to later quarters.”