(Australian Associated Press)
Workers are still getting used to the ‘new black’ of wages growth, which is running at just two per cent a year, a leading economist says.
Wages rose by just 0.5 per cent in the three months to September 30 as the quarterly wage price index – the preferred measure of wages growth for both the Reserve Bank of Australia and Treasury – missed market expectations.
Economists had forecast a 0.7 per cent bump for the quarter and an annual rate of 2.2 per cent.
CommSec chief economist Craig James said this would ordinarily be a positive result given wages are still outpacing prices.
“But wage earners are still adjusting to the ‘new black’ of wage growth near two per cent rather than 3.5-4.0 per cent,” he said.
“Wages are growing at a slower pace because globally challenged businesses are reluctant to lift prices on the fear of losing sales.”
Workers in the accommodation and food services industries had the highest quarterly rise of 1.7 per cent, while mining company employees saw their pay packets inch up by just 0.2 per cent, according to Australian Bureau of Statistics data released on Wednesday.
In the public sector, public administration and safety had the strongest quarterly growth of 1.2 per cent, while workers in electricity, gas and water were among those with the lowest increase of 0.5 per cent.
The Australian dollar plunged after the figures were released, diving as low as 75.77 US cents at 1306 AEDT, after trading at 76.29 US cents just before the release.
Earlier this year, the Fair Work Commission awarded Australia’s 2.3 million lowest paid workers a 3.3 per cent wage rise, which equates to $22.20 a week and was the largest increase in six years.
ANZ senior economist Felicity Emmett said the lack of impact from the bigger than usual minimum wage rise suggested underlying wages growth actually slowed in the quarter.
“A further reduction in the unemployment rate is clearly required before we see a more sustained rise in wage growth,” she said.