30/08/2013 - 15:34

Demand drives WA wages

30/08/2013 - 15:34

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Demand drives WA wages
CommSec economist Savanth Sebastian.

A NEW in-depth analysis of wages data across Australia shows some major differences by geography, gender and occupation.

Western Australia continues to dominate as the high wage state, largely driven by the mining boom and the resulting demand for workers across an array of industries.

In addition, male wages continue to outpace female earnings. And the gap between high and low-wage industries continues to widen.

The gap between male and female earnings shows no signs of closing. On average, men are earning $13,827 more per year than women. One key reason for the disparity is the strength in demand for labour in male-dominated sectors, such as mining and construction.

However, given the pullback in mining investment it may be that the gap between male and female wages widens at a slower pace in the near future.

The latest data on wages bears out what most households would be well versed with – Chinese industrialisation is leading to major shifts in our economy.

Wages in the mining sector are now almost 2.5 times the earnings in food sectors like cafes and restaurants, as well as across the retail sector.

And the resources regions of WA, the Northern Territory and Queensland have been clearly dominating in the pay stakes – a trend that may be less prevalent over the coming year with the pullback in mining investment.

Average annual earnings in WA were up 8.4 per cent for the year to $85,530, with the state bettered only by the ACT, where wages rose 6.8 per cent to $88,504.

The highest average wage is found in the mining sector, at $126,022 per year. Next highest are professional, scientific and technical services ($88,743), information media and telecommunications ($86,897), and finance and insurance services ($85,556).

Nationally, average weekly ordinary time earnings rose by 1.8 per cent in the six months to May to be 5.3 per cent higher than a year ago. Private sector wages rose by 5.7 per cent over the year. Public sector wages rose by 4.5 per cent over the year.

However because the average earnings data is affected by compositional changes, such as the shift from full-time to part-time and movements across sectors, the wage price index becomes the best measure of wages growth.

The wage price index measures changes over time in the price of labour services, unaffected by changes in the quality and quantity of work performed.

On this measure, at present, wage growth is subdued. The wage price index rose by 0.7 per cent in the June quarter.

The index shows that annual growth of wages eased from 3.2 per cent to 2.9 per cent – equal to the slowest growth rate in 3.5 years.

There hasn’t been a slower period of growth since March 2000.

 

*Savanth Sebastian is an economist with CommSec.

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