Australian Annual Wage Growth Hits Highest Level Since 2012

A window cleaner works on a shopfront in Melbourne, Australia, on July 7, 2011. William West/AFP via Getty Images

Australian wages have risen to their highest level since 2012, with the annual growth rate reaching 3.1 percent in the September quarter.

New Australian Bureau of Statistics (ABS) data shows the national wage price index (WPI) climbed one percent in the three months to September, a slight increase compared to the 0.7 percent growth recorded in the June quarter.

“This is the highest quarterly growth in hourly wages recorded since March quarter 2012,” ABS program manager of prices, Michelle Marquardt, said.

Marquardt said the private sector was behind the record lift in wages across the country, with a 1.2 percent growth, twice the rate in the public sector.

She also mentioned that there had been upward pressure on wages in the private sector due to competition for skilled workers, as well as a rise in the minimum wage rate and awards resulting from the Fair Work Commission’s decision in June.

A staff member shucks oysters at the Sydney Fish Market in Sydney, Australia, on April 14, 2022. Lisa Maree Williams/Getty Images

Among industries, retail trade experienced the most significant quarterly and annual growth at 2.4 percent and 4.2 percent, respectively.

Meanwhile, the industries driving wage increases was health care and social assistance (up 1.5 percent), as well as professional, and scientific and technical services (up 1.7 percent).

Yet labour force data revealed upward movement in nominal wages in the three months to September, real wages actually dropped as inflation hit a record high of 7.3 percent during the quarter.

Economists’ Response to Wage Figures

Ernst & Young senior economist Paula Gadsby described the latest WPI figure as a double-edged sword.

“Real wages continue to fall, which will further weaken consumer confidence, already at recessionary lows due to the rising cost of living and rising mortgage rates,” Gadsby said in comments obtained by AAP.

“On the upside, it will not add much to price pressure, further assisting the Reserve Bank in their efforts to cool the economy and tame inflation.”

In addition, she said fierce competition for workers, as reflected in the nearly 50-year low unemployment rate, would gradually add to wage growth.

Meanwhile, Commonwealth Bank of Australia economists said wage growth was approaching desired levels because the latest figures were consistent with the Reserve Bank of Australia’s inflation target of two to three percent.

While they expected annual wage growth to continue to rise over 2023, the economists believed tightness in the labour market will pass because many job vacancy measures remained below their cyclical peaks.

They also kept their forecast for the official cash rate unchanged, expecting another 0.25 percent hike in December, taking the rate to 3.1 percent.