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Wages growth worst in a century

Real wages have continued to collapse with the latest data confirming Australia has suffered the worst real wage decline in more than a century.

Wages growth worst in a century
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The seasonally adjusted wage price index (WPI) rose 0.7 per cent in March quarter 2022 for the second consecutive quarter, according to data released by the Australian Bureau of Statistics (ABS).

Wage rises across the private sector were the main driver of growth over the quarter, increasing 0.7 per cent for March quarter 2022 and annually 2.4 per cent. Regular annual wage and salary reviews drove wage growth for the sector, with a small number of larger increases paid to retain and attract in-demand skilled workers.

Public sector wages grew 0.6 per cent for March quarter 2022 and annually 2.2 per cent.

However, Greg Jericho, employment and fiscal policy director at the Australia Institute’s Centre for Future Work said the latest wages data showed that real wages in the past 12 months fell 2.5 per cent.

“This horror result for workers shows that not only are wages not putting pressure on inflation but that workers are not seeing the benefits of lower unemployment,” said Mr Jericho.

“Real wages are now below what they were at the last election and are essentially no different from where they were at the September 2013 election.”

Matt Grudnoff, senior economist at the Australia Institute said the figures represented the “biggest destruction of real wages in Australia since records began”.

“Looking at it on an annual basis and including the forecast in the budget estimates for next year we can see the unprecedented fall from 2021 to 2022 of real wages, which are expected to fall 3.5 per cent,” he said.

“This underscores the fact that low unemployment is not stimulating wage growth, and government intervention is required.

“The anecdotal stories of big wage increases that have been told by business appear to be isolated incidents.

“The record low unemployment rate does not appear to have induced any major increase in wages. Wage growth has returned to the anaemic pre-pandemic levels.”

Michelle Marquardt, head of prices statistics at the ABS, said wage growth is influenced by both the size of changes in hourly wage rates and the proportion of jobs recording a change.

“In March quarter 2022, the average size of private sector hourly wage rises increased to 3.4 per cent, the highest quarter increase since June 2013,” she said.

“The proportion of jobs recording these rises (15 per cent) returned to pre-pandemic March quarter levels, following higher than usual increases in the proportion of private sector jobs receiving a wage increase in the March quarter last year. March quarter last year was affected by the staggered implementation of award wage increases following the Fair Work Commission’s Annual Wage Review 2019-20.

In original terms, the rate of quarterly wage growth across industries ranged from a low of 0.3 per cent for the electricity, gas, water and waste services, retail trade, and accommodation and food services industries, to 0.8 per cent for the administrative and support services, education and training, and arts and recreation services industries. Annual wage growth also varied by industry, from 1.5 per cent for electricity, gas, water and waste services, to 3.1 per cent for rental, hiring and real estate services.

NSW, Victoria, South Australia and Tasmania all recorded the highest quarterly rates of wage growth (0.6 per cent) while Tasmania and the ACT recorded the highest rates of annual wage growth (2.8 per cent). The Northern Territory recorded both the lowest rates of quarterly (0.3 per cent) and annual wage growth (1.9 per cent).

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