2 charts which show where the jobs are in Australia -- and why wages are staying low

Britain’s Queen Elizabeth with nurses at the Royal Children’s Hospital, Melbourne. Picture: William West/Getty Images
  • Analysis from ANZ shows job growth in Australia is almost entirely in the private sector.
  • The strongest sectors for jobs growth are healthcare, construction and retail.
  • Despite the job creation, wage growth in the private sector remains notably slower than the private sector.

Australia’s economy is generating new jobs at a record clip.

And analysis by ANZ senior economist Felicity Emmett shows where that growth is coming from: low paying jobs in the private sector.

Last week’s employment data showed Australia’s economy added 16,000 jobs in February, which was the 16th consecutive month of net job creation — the longest streak ever recorded.

And as this chart shows, employment growth over the last 12 months has been driven almost entirely by the private sector.

“In a turnaround from the previous year, private sector jobs overwhelmingly dominated the gains in employment over the past year. Of the 422,000 jobs created in the year to
February, 417,000 were in the private sector,” Emmett said.

Emmett said the contribution from the private sector job gains bode well for the structural health of Australia’s labour market, given that it employs more people than the public sector.

But it also may go some way toward explaining the reasons behind another key talking point in the Australian economy: stubbornly low wage growth.

Quarterly wage data in February showed a modest pick-up in wage growth, but most of the gains were due to increases in pay for government employees.

Meanwhile, private sector pay — which accounts for the majority of workers — remained weak at just over 1.9%.

So although the private sector is generating most of the jobs, annual public sector pay has now outpaced that in the private sector for the past four years.

By sector, gains over the last 12 months have been in the healthcare and social assistance sector. This post by David Scutt last week shows the scale of the healthcare sector’s recent hiring frenzy.

Jobs growth in the construction and retail sectors has also been strong.

And among the six industries with the highest jobs growth, four of them pay below-average wages:

Emmett says that in itself is nothing new — the trend has been in place for most of the last decade, as the mining boom wound down with a corresponding decline in high-paying mining jobs.

However, “we expect that this trend is likely to continue, given the demographic factors supporting growth in household services,” Emmett said.

“Although with both mining and manufacturing jobs now looking to be stabilising, the extent of the drag may begin to abate.”

For now, the data seems consistent with the RBA’s view on Tuesday that wage growth “is likely to continue for a while yet“.

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