Australian workers saw their base pay rise by an average of 0.7% in the March quarter and 2.4% over the past year, according to the Australian Bureau of Statistics.
- Annual wage growth is below economists’ forecasts, at just 2.4%
- Private sector wage growth has again outpaced that of the public sector
- Wage growth was largely driven by strong increases in a small proportion of private sector occupations
The annual wage increase follows a 5.1% increase in the cost of living, as measured by the consumer price index, over the same period.
Callam Pickering, Indeed’s Asia-Pacific economist, said that means Australian workers have indeed taken a big pay cut.
“After adjusting for inflation, Australian wages have collapsed over the past year,” Mr Pickering observed.
“We haven’t seen such weak real wage growth since the introduction of the GST.
Shortage of staff
Scott Bowerman isn’t surprised wages aren’t rising faster.
He worked as a chef for 20 years but, after the pandemic, he started a labor hire business, Chef 4 Hire, in the Victorian regional town of Wodonga.
It was hit hard by understaffing during the pandemic shutdowns.
However, unlike many employers in the hospitality industry, Mr Bowerman said he no longer has difficulty finding workers.
“I’ve hired 20 employees, and three more this week, so it’s very busy,” he told The Business.
With the cost of living soaring and many employers complaining of staff shortages, Bowerman said most workers in the hospitality industry were still not well paid.
He suspects this is why some companies struggle to attract and retain staff.
“You’re probably looking at around $15 to $18 an hour for a school kitchen worker, but I pay way above that,” he said.
“I pay $28 an hour, and it’s only a weekday, so that’s a big difference. »
However, he may see a longer-term crisis brewing in the sector, with fewer young people undertaking formal training.
Mr Bowerman said TAFE at Wodonga has grown from just over 20 students enrolled as first-year apprentices to just six places this year.
“It’s just completely dead, our industry,” he lamented.
“I’m trying to raise this and talk to high schools and try to get more students and more kids into the industry because right now we’re going to be backtracking.
The lack of interns is an urgent crisis in some sectors, which rely on students to provide additional manpower.
Bonnie Kelepouris runs a dental practice in Melbourne.
She said staffing shortages worsened after many people left the industry during the COVID-19 shutdowns and because there weren’t as many international students studying dentistry in Australia.
She said these students used to work as dental assistants, but now they are hard to find.
“The problem of staff shortage is quite difficult in our industry, not only the lack of candidates applying for available positions, but also the shortage coming from temp agencies,” Ms. Kelepouris observed.
“We don’t have access to international students…especially dentists [in] training, who needed to increase their clinical hours.
“A lot of them signed up with temp agencies or were available, you know, as casual staff at clinics. It’s really gone down since the pandemic. »
Ms Kelepouris said even support and administrative staff are now attracting much higher rates.
“In many firms right now, the hourly rate they are offering is 20-30% higher than what we would have considered a few years ago,” she added.
Pockets of stronger wage growth
A slight increase from the previous December figures (2.3%) brings annual wage growth to its highest level since June 2019.
But wage growth remains well below the average level of 3.1% recorded since the ABS began publishing the figure in 1998.
The last time annual wage growth exceeded this average was in March 2013.
The bureau’s price statistics manager, Michelle Marquardt, said a small proportion of in-demand workers in “market-sensitive” occupations were getting larger pay increases, pushing up the average.
“Wage growth is influenced by both the magnitude of changes in hourly wage rates and the proportion of jobs experiencing a change,” she explained.
Gareth Aird, head of the Australian economy at the Commonwealth Bank of Australia, said the ABS data was supported by more recent data his team had compiled from analysis of CBA customer bank accounts.
“The result is that as wage growth across the economy picks up and some people receive large wage increases, it [are] not widespread wage pressures,” he noted.
One such in-demand profession is Canberra-based data analyst Adam Stephan-Slade.
He was hired earlier this year as director of business operations for the horse racing news and information service, Racing and Sports, after spending most of his working life providing technology and managing defense projects.
“There was an opportunity to move into a new and exciting industry as well as get a small pay raise [of] about 10%,” he said.
Mr Stephan-Slade said networking – knowing the right people – helped him land the job.
“If you know good people, [who] you can tap on the shoulder and start a conversation, I think that really helps,” he said.
Now he is able to hire staff.
“Since I arrived there have been a number of new recruits,” he added.
However, only 15% of private sector workers got a raise in the March quarter.
That’s not unusual, as most companies tend to pass annual pay increases to workers at the start of each new fiscal year, so they show up in the September quarter figures.
However, the seasonally adjusted ABS figures explain this trend, which means that the March figure is really disappointing.
Impact on interest rates
Most economists had forecast wage increases of around 0.8% for the quarter and 2.5% for the year.
The Reserve Bank governor has repeatedly said that wage increases well above 3% are needed to sustainably keep inflation within the bank’s 2-3% target range.
Mr Pickering said economists are somewhat puzzled as to why wage growth is not responding more strongly to falling unemployment.
“Australian wage growth remains at odds with an unemployment rate that is at its lowest in nearly 50 years,” he noted.
“The slow improvement would be a concern for policymakers such as the Reserve Bank of Australia. »
After Wednesday’s disappointing payroll data, most economists now expect the Reserve Bank to raise interest rates by just 25 basis points at its June 7 meeting.
“The RBA does not face a price-wage spiral as seen in other jurisdictions,” Aird noted.
The ABC currently expects the cash rate target to reach 1.6% at the start of next year, up from 0.35% currently, but well below market prices for a maximum rate of RBA greater than 3%.
Post 13h ago13 hours agoWed May 18, 2022 at 01h36, update 1h1 hour agoWed May 18, 2022 at 1:50 p.m.