- Healthcare workers are getting the biggest payrises in the country by sector, earning more than 3% more on average, according to the latest Australian Bureau of Statistics (ABS) data.
- It was followed by the utility, transport, postal, warehousing, professional services and arts sectors.
- The public sector again outpaced private wage growth, with Victorian public servants taking out the top ranking with more than 3.5% wage growth and helping the southern state lead the country.
Wage growth has all but gone missing in Australia – unless you work in a few key industries.
Leading the pack is the healthcare and social services sector, according to the latest ABS wage data out on Wednesday.
“Wage growth in the healthcare and social assistance industry is well above any other industry,” Indeed Asia-Pacific economist Callam Pickering tweeted. “Huge demand for healthcare & aged care services has underpinned strong demand for workers and higher wages.”
Wage growth in the healthcare and social assistance industry is well above any other industry. Huge demand for healthcare & aged care services has underpinned strong demand for workers and higher wages #ausbiz pic.twitter.com/ErzABQxn3V
— Callam Pickering (@CallamPickering) November 13, 2019
They were followed by those working in electricity, gas, water and waste services, and by transport, postal, and warehousing. Wages in those sectors grew by about 2.5%, as did professional, scientific and techincal services, and the arts.
Issuing a separate note to Business Insider Australia, Pickering said only healthcare, being the one industry that paid wage growth above 3% in the September quarter, could be considered “healthy”.
“No such momentum is present anywhere else in the economy. Six industries have wage growth below 2%, including big employers such as retail, construction and manufacturing. Private sector wages, which better reflect market forces and economic conditions, remain weak across the board,” he said.
“Every other industry has wage growth below its decade average.”
Those include the mining industry, which although it enjoyed something of a second boom in Australia earlier this year, has lost steam to sink to 13th place. It was followed by other under pressure sectors, like retail, construction and manufacturing.
The public sector meanwhile outstripped the private sector, with Victorian public servants getting more than 3.5% wage growth – the highest in the country – further demonstrating the different speeds in each of the state economies.
“Victoria has the strongest wage gains, at 2.8% over the past year, but that largely reflects public sector gains,” Pickering said. “Wage growth in New South Wales remains disappointing, at just 2.2%, despite strong employment growth and a low unemployment rate. Growth in Western Australia remains weak at just 1.6% over the past year.”
With wage growth tied to economic growth, Australia has a long way to go before it can breathe easy.
“We are unlikely to see much improvement in wage growth until labour market slack declines,” Pickering said. “We need an unemployment rate of 4.5% (currently 5.2%) and an underutilisation rate of around 12% – currently 13.5% – to get wage growth back to 3%.”
Currently, the yearly average sits at 2.2%.
“Although this is faster than price inflation, meaning the average worker is seeing an increase in real wages, the pace remains stubbornly weak,” BIS Oxford Economics chief economist Sarah Hunter noted.
“The data provides further evidence that wages and jobs growth are inextricably linked, and with the headwinds facing the economy unlikely to abate in the near term we don’t expect wages growth to accelerate markedly in the near term,” she said. “Given this backdrop, we expect the RBA to cut the cash rate again in early 2020, to 0.5%.”
With rate cuts reaching their limits, and with the federal government unwilling to stimulate the economy through a spending package, InvestSmart chief market strategist Evan Lucas expects the Reserve Bank will need to do even more in the way of unconventional monetary policies like quantitative easing (QE).
Wage Price Index due in 30mins. YoY est is for wages to hold at 2.3% – aka employment slack. It will be another conformation that #QE Aussie styles is coming to a market near u in 2020. #ausbiz #RBA pic.twitter.com/JideHpgQ2e
— Evan Lucas (@EvanLucas_INV) November 12, 2019
In other words, the RBA may be forced to print money if the existing supply won’t find its way into the hands of workers.
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