The ABS just released its latest quarterly wage price index for Australia which shows that the “seasonally adjusted Wage Price Index (WPI) rose 0.6 per cent in the September quarter 2014 and 2.6 per cent over the last year.”
Before we go any further, take a look at this chart.
Even the ABS characterised the growth in wages as “subdued”. But while 2.6% doesn’t sound too bad now in the context of the 1.5% wage rise that the Diggers in the ADF recently received the reality was this data was upwardly distorted by the accommodation and food services industry which the ABS said, “had the largest quarterly rise at 1.9 per cent due, in part, to the minimum wage increase.”
Mining, on the other hand, received increases of just 0.2% which is “the smallest quarterly growth ever recorded for this industry”. Growth in wages for miners has shrunk from 5.2% in the year ending September 2012 to just 2.5% now.
The slow down in wages growth to 15 year lows speaks volumes of Australian Businesses trying to rebuild competitiveness by limiting cost increases through wages and it also suggests the level of slack in the labour market.
The series and trends suggest however, that the decline in the rate of wages growth is not over yet. It is going to be hard for the consumer side of the economy to grow more strongly than wages in the coming months, quarters and years ahead.