This chart should worry any Australian hoping for a larger pay increase

  • Enterprise Bargaining Agreements (EBAs) are the main type of collective agreement in Australia, covering 36% of all employees.
  • Pay rates in new EBAs struck in the September quarter last year fell to the lowest level on record.
  • UBS says this will weigh on overall wage outcomes in Australia over the next few years.

If you want a clue as to where Australian wage growth may head over the next few years, there are few better indicators out there than Enterprise Bargaining Agreements, or EBAs.

EBAs are the main type of collective agreement in Australia, covering just over one-third of employees.

Given the sheer number of Australians that they cover, the pay deals struck in newly-inked EBAs should be influential on overall wage pressures in Australia.

If this chart is anything to go by, things are not looking good for workers hoping for a big pay rise.

In the September quarter last year, wage increases in new EBAs hit the lowest level on record. That is, wage increases were lower than those EBAs they replaced.

Source: UBS

As this next chart shows, the sharp drop in new EBA pay rates has also impacted the average pay rate for all outstanding EBAs, see them too drop to the lowest level on record.

Source: UBS

This creates a problem, says UBS, noting it will place further downward pressure on wages for several years.

“These agreements usually last for a couple of years, so this will weigh on overall wage outcomes for a while,” UBS says.

“If wage growth is to pick up, wage increases for other workers — including in future enterprise agreements or in other wage-setting streams –– will need to pick up.”

Given the trends over the past seven years — where wage growth has continuously undershot expectations both in Australia and abroad — that outcome appears anything but uncertain.

NOW READ: Australia’s wages data beats — but there’s still a big problem with most people’s pay

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