Aussie wages growth falls to GFC levels

Wages growth fell to just 0.4 per cent in the June quarter, on par with the depths of global financial crisis, Australian Bureau of Statistics data show.

Despite a jobless rate of 4.9 per cent in June, the lowest level in a decade, wages remain subdued and came in below market consensus of 0.6 per cent.

“The subdued 0.4 per cent q/q rise in the wage price index in Q2 underlines that the tight labour market didn’t generate large cost increases even before the latest virus restrictions,” Capital Economics’ Marcel Thieliant said.

Michelle Marquardt, ABS Head of Prices Statistics, said the growth during the quarter was one of the lowest rates recorded for the series.

“Apart from a few isolated examples of skills shortages placing pressure on employers to meet expected market rates, the private sector wage growth recorded over the quarter (0.5 per cent) was generally subdued,” he said.

Public sector wages rose 0.4 per cent, dampened by negotiations around new enterprise agreements and the postponement of scheduled wage rises.

The public sector recorded its lowest annual rate of growth (1.3 per cent) since the series commenced in 1997, proving false suggestions public servants were getting an easier ride than their private sector counterparts.

Private sector hourly wage rates rose 1.9 per cent over the year.

The annual growth rate edged up from 1.5 per cent to 1.7 per cent, in line with the Reserve Bank’s forecast of 1.75 per cent, However, this increase was partly driven by the unwinding of large wage reductions implemented a year ago.

“Excluding those effects, underlying wage growth was a subdued 1.6 per cent,” Mr Thieliant said, noting the RBA’s suggestion that bonuses were increasing was not evident in the data.

“Annual wage growth including bonuses was unchanged at 1.9 per cent, barely higher than the overall increase in wages.”

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