Australian wages growing at less than half the pace of inflation

The Australian Bureau of Statistics’ latest data showed the WPI at an annual rate of 3.1 per cent, less than half of the inflation figure of 7.3 per cent, which in reality means Australian wages have actually contracted.

The gap of 4.2 percentage points eclipsed the previous record of 3.6 percentage points set just three months earlier in the June quarter. The previous widest gap between wages and consumer price gains was 3 percentage points during the September quarter of 2000.

Program manager of prices at the ABS, Michelle Marquardt, said this is the highest quarterly growth in hourly wages recorded since the March quarter 2012.

“In seasonally adjusted terms, this growth was primarily driven by increases in wages for the private sector which grew at twice the rate of wages in the public sector (1.2 per cent compared to 0.6 per cent),” she said.

“Labour market pressures in the private sector combined with the largest Fair Work Commission award increase in more than a decade saw rises in both the size of average wage changes and the proportion of private sector jobs recording a wage change.”

According to the ABS figures, the average size of hourly wage increase for those jobs where the wage rate moved was 4.3 per cent, up from 2.9 per cent in the September quarter 2021. Nearly half (46.4 per cent) of private sector jobs recorded a change in their hourly wage rate this quarter compared to around one-third (33.9 per cent) in the same quarter last year.

“The annual rate of growth at 3.1 per cent, is the highest recorded since March quarter 2013. The growth rate in private sector wages was stronger than in the public sector (3.4 per cent compared to 2.4 per cent) continuing the trend started in June quarter 2021,” Ms Marquardt said.

“This quarter, a significant contribution to wages growth came from jobs paid by individual arrangement. These are mostly private sector jobs where employers paid increases based on end of financial year wage and salary reviews or interim increases as a retention strategy.”

The highest quarterly and annual growth was recorded in the retail trade industry at 2.4 per cent and 4.2 per cent. The annual rate of growth included two award increases within the year.

Healthcare and social assistance featured prominently with quarterly increases of 1.5 per cent while education and training recorded the weakest growth of 0.8 per cent and 2.2 per cent on a quarterly and annual basis, respectively.

The Australian Council of Trade Unions (ACTU) assistant secretary, Liam O'Brien, said the latest WPI showed “the limits of what can be done with a broken system”.

“Even with historic wage rises flowing through this quarter to minimum and award-dependent workers, everyone is still going backwards, at an average of 4.2 per cent,” he said.