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Wednesday, 22 February 2017

Wages growth still stuck in a rut

Wages growth in a rut

Private sector wages grew by just 0.4 per cent in the December quarter, while public sector wages grew by 0.6 per cent, according to the Australian Bureau of Statistics (ABS). 

Over the year private sector wages growth of 1.8 per cent was well behind the 2.3 per cent growth seen in the public sector.


Nationally across all sectors annual wages growth remained stuck at 1.8 per cent, equalling the record nominal low seen in the preceding quarter. 


Mining struggles

Perhaps not surprisingly the weakest wages growth was seen in the mining sector at just 1 per cent in 2016.

The strongest wages growth was seen in services sectors such as healthcare and social assistance (2.4 per cent wages growth in a strongly expanding workforce), and education and training (2.4 per cent). 

Manufacturing wages grew by 1.8 per cent, as did wages in the construction sector. 



Reflecting the weakness in the mining sector, Western Australia had the weakest growth in wages in 2016 at 1.4 per cent. 

Improving Tasmania moved to the top of the pile with wages growth of 2.4 per cent, while conditions have also improved a little of late in New South Wales (2.1 per cent) and Queensland (2 per cent).



It's interesting to note that over the history of the data series - and particularly through the resources boom - Western Australia has posted by far the strongest increases in wages, and thus some mean reversion may be in play. 


Despite annual wages growth of only 1.8 per cent, wages growth continues to outpace inflation, and as such real wages have continued to grow. 


Overall, a weak result as widely expected, but the huge rebound in commodity prices together with some other brighter data suggest that the nadir of the quarterly wages growth cycle may soon have passed.

Picture by Ryan McGuire