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Category: Economic Trends / Industrial Relations / Work

Wage growth hits fresh low of 1.9pc

Wednesday, 16 Nov 2016 08:50:33 | Michael Janda

Private sector wages grew at 1.9 per cent, public sector pay at 2.3 per cent. (Giulio Saggin, file photo: ABC News)

Wage growth has hit a fresh record low below 2 per cent, with workers across all industries seeing pay increases that barely match the rising cost of living.

Key points:

  • Wages grow 1.9pc in private sector, 2.3pc in public sector over year to September 30
  • Mining the weakest (1pc), health care/social assistance strongest (2.4pc)
  • Economists hopeful wage growth will increase

The Bureau of Statistics Wage Price Index rose 0.4 per cent in the September quarter, seasonally adjusted, and was up just 1.9 per cent over the past year - a record low.

Public sector employees did a little better than their private sector counterparts, with a 2.3 per cent pay increase compared to 1.9 per cent.

However, the ABS said wage growth was weak across all sectors.

"Through the year wage growth is now below 2.5 per cent for all industries," they observed.

"In the September quarter 2016 wage growth ranged from 1 per cent for mining to 2.4 per cent for health care and social assistance."

The latest ABS Consumer Price Index put inflation at 1.3 per cent over the year to September.

The wage result was below the economist consensus forecast of 2 per cent, although the UBS economics team believes it may represent the low point for pay rises.

Wage price index graph Photo: The wage price index is at its lowest since records began in the late 1990s. (Supplied: ABS, ANZ, Department of Employment, UBS)

"The recent slowing in jobs growth and a still high underemployment rate should continue to cap wage growth, consistent with our forecast for a 0.5 per cent quarter-on-quarter rise in the wage price index for the third quarter," they noted ahead of the data.

"This would drag the year-on-year to a record low 2.0 per cent from 2.1 per cent in the second quarter, albeit this is likely to be the trough."

More to come.

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