Australian wage growth fell to the lowest level on record last year.
According to the ABS, wages grew by 0.5% in the December quarter after seasonal adjustments, leaving the annual rate at just 2.16%.
The figure was below the 2.3% increase expected and was the lowest level seen since the survey began in 1997.
Given the limitations of the data, it is likely that wages growth is now at levels not seen since the early 1990s recession.
Private sector wages grew by 0.5% during the quarter, leaving the annual rate at 2.0%. It was the lowest level on record.
Like the private sector, public sector wages grew by 0.5% over the quarter, although the annual rate was slightly higher at 2.6%.
Without seasonal adjustments, wages for financial and insurance workers recorded the fastest quarterly growth rate of all industries at 1.1%. At 2.8%, workers in this sector also enjoyed the fastest annual increase of all industries surveyed.
At the other end of the spectrum, wages for administrative and support services workers grew by just 0.1% from the September quarter, leaving the annual rate at 1.4%, equal with the mining sector.
The chart below, supplied by the ABS, reveals the quarterly and annual changes in wages by industry without seasonal adjustments.
By region, South Australian workers enjoyed the fastest quarterly increase in their wages at 0.7%. Tasmanian workers saw their wages grow by just 0.1%, the lowest level for the quarter.
Over the year workers in Victoria and the Northern Territory saw their wages increase by 2.4%, the fastest in the country. ACT workers saw wages rise by just 1.6%, the lowest of all states and territories.
Unfortunately or workers anticipating a sharp rebound in wage growth in the period ahead, Justin Fabo, senior economist at ANZ believes subdued wage inflation is likely to last for some time yet.
“Wages growth is likely to remain subdued for some time due to spare labour market capacity, low inflation expectations and the downward pressure on Australian incomes from the falling terms of trade and the related necessary adjustment in Australiaâ€™s relative labour cost structure,” said Fabo following the ABS release.
However, the deceleration in wage inflation does have a silver lining, according to Fabo.
“Subdued wages growth has been supporting jobs growth overall. We expect modest improvement in wages and household income growth, and hence consumption growth, over the year ahead.”
Essentially low wage costs are keeping more people in employment, and is allowing firms to put on additional workers than what would have otherwise been the case.
It might not be much to cling on to, but its certainly a better outcome than the alternative.