Australia’s wage price index has climbed at the fastest rate in almost eight years though it still lags behind the country’s headline inflation rate.
As per Australian Bureau of Statistics data released today, wages have increased 0.7 per cent from the last three months to 2.6 per cent. While far below the inflation rate of 6.1 per cent and economist expectations of a 2.7 annual increase, this is the highest wage growth rate in Australia since September 2014.
The data reveals annual payrolls in the public sector rose by 2.4 per cent (a 0.6 per cent increase in the June quarter) compared to 2.7 per cent in the private sector wages. This comes even as Australia’s tight labour market continues to face shortages and high vacancies.
“Expanding demand for skilled jobs over the last 12 months has continued to build wage pressure across a broader range of industries and jobs, reflected in the increasing size of pay rises,” noted Michelle Marquardt, head of Prices Statistics at the ABS.
With a 3.4 per cent increase, the construction industry has recorded its highest annual wage growth in a decade. Similarly, wages in Australia’s manufacturing and real estate industries have seen significant climbs at 3.1 per cent. The accommodation and food services industry – hugely impacted by labour shortages – saw modest wage increases.
The industries that have seen some of the lowest increases include education and training (2.3 per cent) and healthcare (2.3 per cent).
In a state and territory analysis, Tasmania and Queensland delivered the strongest annual growth.
The new figures are likely to strengthen calls from trade unions to address real household incomes at the Albanese government’s Jobs and Skills Summit, to be held in Canberra next month.
The Australian Council of Trade Unions has previously advocated for major changes to Australia’s skills and migration systems to address these issues.
ACTU President Michele O’ Neil had called the system “broken”, adding: “The union movement sees an urgent need to lift wages. Too often employers claim a skills shortage when in reality there is a shortage of jobs with good wages and conditions.”
Kris Grant, CEO of ASPL Group, predicts the annual wage price index will climb towards 6 per cent over the remainder of the year, led by private sector wages rising due to a severe skills shortage.
“With the labour market the tightest it has been in almost 50 years, and labour shortages being experienced across all sectors, employers are having to pay larger salaries to attract and retain staff,” she elaborated. “In many cases, we are seeing salaries rise in the private sector by 15 per cent to 20 per cent, such as in the finance and technology sectors, where candidate shortages are acute.
“Employers who aren’t meeting wage demands, at least in part, could lose their most valuable resource – their staff – to other organisations that better recognise their value. That will put more pressure on wages costs over the remainder of the year.”
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
READ MORE: How are Australian businesses responding to pay rise requests?
