28/11/2006 - 21:00

Mixed signals on wage levels

28/11/2006 - 21:00

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Western Australia is outperforming the rest of the nation in terms of wages growth despite overall wages failing to keep pace with rising inflation, according to figures from the Australian Bureau of Statistics.

Mixed signals on wage levels

Western Australia is outperforming the rest of the nation in terms of wages growth despite overall wages failing to keep pace with rising inflation, according to figures from the Australian Bureau of Statistics.

Recent ABS data indicates average weekly ordinary time earnings increased by 0.7 per cent in the three months to August, a change of 2.9 per cent in a year and below the annual growth of inflation.

Wages in WA are now higher than anywhere else in Australia, surpassing previous leader NSW.

The rise in full-time adult ordinary time earnings for males exceeded that of their female colleagues, rising 3.4 per cent compared with 2.4 per cent, while growth in the public sector outstripped the private sector.

Full-time adult ordinary time earnings in the private sector rose 2.8 per cent, while growth in the public sector was 4.6 per cent.

The unemployment rate was unchanged at 4.7 per cent, while the participation rate was up at 65 per cent.

The release prompted speculation by some analysts that this year’s series of interest rate rises by the Reserve Bank had started to take effect.

“These data confirm that wage pressures remain well contained – a remarkable feat in the current tight labour market. This should provide the RBA with some breathing space to assess the full impact of the three rate rises this year,” ANZ senior economist Mark Rodrigues said.

Others commentators pointed to the federal government’s Work Choices legislation as having exerted a dampening effect on wages growth.

ACTU secretary Greg Combet said many workers would be affected by a fall in the value of their take-home pay.

“This is the second quarter in a row since the new IR laws came in that has seen real average earnings for full-time workers drop below the cost of living for the previous 12 month period,” he said.

“The historically low value of average earnings is caused by the federal government’s new IR laws and a fall in overtime, penalty rate and bonus payments to workers under the laws.”
There was concern expressed in some quarters that the figures may not reflect the most recent developments in the labour market, with wages growth yet to mirror the surge in demand for labour earlier this year.

Additionally, the minimum wage rises by the Australian Fair Pay Commission were applied later this year than the increases formerly awarded by the Australian Industrial Relations Commission.

Once these factors are reflected in the wages price index, wages growth could rise to, and even exceed, 4.5 per cent, the Reserve Bank’s desired ceiling for wages inflation.

The Melbourne Institute Wages Report, which uses employees’ self-reported wage changes over a 12-month period as opposed to level of earnings per person, presents a different picture in terms of wages growth.

The institute’s recent report found annual growth in the total pay indicator was 3.8 per cent in the 12 months to November, rising from the 2.7 per cent recorded in the year to August.

Those reporting the largest average pay rises were young workers, those on individual contracts and managers and professionals.

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