Wages rose in the September quarter in a return to a “pre-pandemic” pattern, with some industries pocketing more due to strong demand.
The Wage Price Index (WPI) rose 0.6% over the period, bringing the annual growth rate to 2.2%, from 1.7% previously, the Australian Bureau of Statistics revealed on Wednesday.
CommSec said both figures were in line with expectations.
âWages rose slightly above inflation as the consumer price index stood at 2.1%,â said CreditorWatch chief economist Harley Dale.
âToday’s salary update supports the economic recovery underway in Australia and reveals an improved result compared to 2020, when wage and salary reviews were delayed due to Covid.
“The results are still not hot, but we appear to be heading in the right direction, providing further evidence that the pulse of economic activity in Australia is on the rise.”
Wage growth in the private sector continued to outpace that of the public sector, rising 2.4 percent annually from 1.7 percent.
“In real (inflation-adjusted) terms, public sector wages continue to decline,” Dale said.
ABS’s head of price statistics Michelle Marquardt said seasonally adjusted numbers show a return to a more steady pattern of wage growth for the September quarter following labor market disruptions until ‘in 2020 and 2021.
âSalary and salary revisions towards year-end, planned company agreements and annual awards increases have all contributed to the growth,â she said.
âPockets of wage pressure continued to build up for skilled construction, engineering and business related positions, resulting in larger one-time increases as companies sought to retain experienced staff and attract new employees. “
The professional, scientific and technical services sectors grew the most, with wages rising 1.3% in the quarter and 3.4% in the year – the highest growth rates in any industry. industries during the quarter and highest for this sector since the December 2012 quarter.
Construction (2.6 percent) is second in annual growth, followed by accommodation and food services in third place (2.5 percent).
“These latter two findings likely reflect that skills shortages were already dire before the lockdown restrictions were eased,” Dale said.
The mining industry recorded the smallest quarterly increase of just 0.4 percent and an annual increase of 1.5 percent.
This was the same 12-month increase for arts and recreation services, and the only sector with lower annual wage growth was electricity, gas, water and waste services (1.2 %).
The data showed that workers in individual agreements and company bargaining agreements had been affected by various wage freezes since the start of the pandemic, extending the time between wage increases to more than a year.
In Tasmania – where CommSec’s State of the States report has ranked its best-performing economy in the country for seven consecutive quarters – Australia’s highest wage increase was recorded for the fourth consecutive quarter.
At 2.7%, Apple Island recorded its highest annual growth rate since June 2013.
CommSec Senior Economist Ryan Felsman noted that annual wage growth reached an all-time high of 1.4% by the end of 2020, with economic activity generally picking up following the initial shocks of Covid- 19 and Delta on the job market.
âABC Group economists expect wage growth to gradually increase over the next year as the labor market tightens,â Felsman said.
âWe expect the WPI to accelerate to an annual growth rate of 2.6% by the end of 2022, sustainably pushing core inflation to the middle of the target range of 2-3% of the Reserve Bank and facilitating a rate hike.
Having said that, Reserve Bank Governor Philip Lowe said yesterday (Tuesday) that wages will have to rise to ‘3 points something’ and that this is not the only determinant of pricing and policy pressures. monetary.
âIn addition, a rebound in labor market participation and the reopening of Australia’s borders could further boost labor supply, alleviating wages and broader consumer price pressures. “
AMP Capital’s senior economist, Diana Mousina, said her company believes the acceleration in wage growth will be faster, reaching 3% in 2022.
Betashares chief economist David Bassanese said it was conceivable that wage growth would accelerate to around 3% to 3.5% in the coming years, but would likely require a sustained drop in the rate of employment. unemployment at around 4% or less.
Last month, the unemployment rate rose to 5.2 percent.