Wages growth at 18-year low

Western Australia recorded its lowest level of wages growth in the year to June since at least 1999, at 1.4 per cent, according to data from the Australian Bureau of Statistics.

That made WA the worst performer nationally for the 2017 financial year, with South Australia and the Northern Territory leading the way at 2.1 per cent. 

Nominal annual wage growth in WA, ten years.

Adjusting for inflation, which is measured by the consumer price index, WA’s performance looks slightly better.

The most recent inflation data for Perth came in at 0.7 per cent for the 2017 financial year, meaning real wages growth – the measure of how much workers’ incomes are increasing above changes in prices of goods – was about 0.7 per cent.

Using that measure, both Sydney and Melbourne went backwards.

Data for the three months to June showed WA ahead of some other states, with quarter-on-quarter growth of 0.3 per cent putting WA in the middle of the pack.

Of all industries, mining recorded the highest quarterly rise, at 0.8 per cent.

“Western Australia was the main driver of wage growth in the mining industry in June quarter 2017, with some employees receiving their first wage increases in several years,” the ABS said.

Nationally, wages growth was 1.9 per cent for the year.

Commsec chief economist Craig James said there were some indicators to suggest national wages growth had bottomed and might be on the way up.

“Including bonuses, wage growth lifted in the June quarter at the fastest rate in seven years,” Mr James said in a note to investors.

“And the Reserve Bank noted yesterday that its chats with businesses had revealed stronger demand for some skilled workers.

“If the job market continues to improve as expected then wages should also start to trend higher.

“A few years ago wages were rising at a 3-4 per cent annual rate.

“Today it is more like 1-2 per cent growth.

“(Partly) wages are growing at a slower pace because growth of consumer prices has also eased.”

Job search website Indeed economist Callam Pickering was less bullish.

“Although other measures of the labour market have improved, wage growth remains at a level that we haven’t seen since our last recession a quarter century ago,” Mr Pickering said.

“Private sector wages have increased by just 1.8 per cent over the past 12 months, only just keeping pace with inflation, despite strong growth in corporate earnings and profitability.

“So far, improved business conditions have not been passed on to households in the form of higher wages.

“The latest data, while not unexpected, suggests that wage growth is still some way off breaking out of its slump.”