- Annual average wage growth in Australian EBAs struck in the September quarter hit 3.2%, nearly double the pace of inflation.
- The proportion of sectors recording average annual increases of more than 3% is also lifting, a good sign for wage pressures as EBAs cover around a third of all workers.
- There are still a large proportion of underutilised workers in Australia. Until this changes, broader wage growth is still likely to remain fairly weak.
It’s nearly Christmas, the season of giving.
Well, here’s an early Christmas present to Australian workers from us, courtesy of ANZ Bank.
Enterprise Bargaining Agreements (EBAs) struck in the September quarter contained an average annual wage increase of 3.2%, well above the pace of inflation and up from the cyclical low of 2.2% seen in mid-2017.
EBAs are the main type of collective agreement in Australia, and cover around a third of all employees.
The chart comes from ANZ Bank.
“The improvement was relatively broadly based, with the largest increases in the rental, hiring and real estate services (7.9%) and construction (5.9%) sectors,” says Felicity Emmett, Senior Economist at ANZ.
“The share of industries with an annual wage increase of 3% or more rose to 43%, up sharply from the low of 5% seen in Q3 last year.”
So the breadth of 3% plus increases is broadening, a good sign for broader wage growth in the economy.
While welcome news, it comes with a couple of caveats.
The first, as seen in the first chart, is that average pay rates in newly-struck EBAs are often volatile, spiking one quarter only to fall heavily the next.
Secondly, while Australia’s unemployment rate sits near multi-year lows, there is still an abundance of underutilised workers in Australia — those who are unemployed or who have a job but would like to work more — meaning there’s still plenty of people out there looking for a job.
Until that changes, it continues to point to lacklustre wage growth outside of some individual sectors.