24/02/2017 - 11:30

Poor post-boom wages growth

24/02/2017 - 11:30

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Private sector wages growth of just 0.1 per cent in Western Australia in the three months to December, matched with recent unemployment figures, suggests the state’s spluttering post-boom recovery has some way to run.

Wages growth has been soft nationally for some time. Photo: Attila Csaszar

Private sector wages growth of just 0.1 per cent in Western Australia in the three months to December, matched with recent unemployment figures, suggests the state’s spluttering post-boom recovery has some way to run.

The latest numbers from the Australian Bureau of Statistics show wages growth in WA has slowed significantly since the height of the boom, when it had frequently exceeded 1 per cent on a quarter-by-quarter basis.

In fact, in real terms, private sector wage growth was negative, with recent consumer price index data showing Perth inflation of 0.4 per cent in the December quarter.

That means growth was actually -0.3 per cent in real terms.

However, public sector wage growth, which covers employees of government, was stronger – growing 0.4 per cent in nominal terms to be roughly in line with inflation.

The slow wages data comes a week after labour force numbers showed WA’s unemployment rate had become the worst in the nation, despite improving 0.1 percentage points to 6.5 per cent seasonally adjusted.

On an annualised basis, WA’s wage growth was the worst of any state for 2016, at 1.4 per cent, with Tasmania (2.4 per cent) and South Australia (2.2 per cent) the surprise leaders.

St George senior economist Jo Horton said WA’s poor performance had been due to the aftermath of the mining boom.

She said although the national data was in line with market expectations, it was still very soft.

“The slow pace of wage growth reflects slack in the labour market and a low inflation environment globally,” Ms Horton said.

“Employment has grown over the past year, but growth has been in part-time employment, rather than full-time employment, which has fallen.

“(But) slow wages growth may have allowed businesses to employ more people than they may otherwise have done.

“The (national) unemployment rate has declined from 6.0 per cent in January last year, to 5.7 per cent in January this year.

“While this reflects in part a fall in the workforce participation rate, over 100,000 new jobs were created in that time.”

CommSec chief economist Craig James said that, despite the low growth rate, nationally, it was higher than inflation, meaning it was growing in real terms.

“Record wealth is also providing support for consumer spending, as highlighted by a number of retailers in the current earnings season,” Mr James said.

Earnings

The ABS released a further piece of data earlier this week, indicating average weekly full-time earnings in WA had grown only 40 cents in a six-month period to November.

That took earnings to $1,702.80 in trend terms. Female full time earnings represented 76.2 per cent of male earnings, up from 74.2 per cent 18 months earlier.

For females, average earnings grew $7.20 to $1,410.60 for the six-month period.

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