Concerns over record-low wages growth

Figures from the Australian Bureau of Statistics show wages rose by half a per cent in the March quarter, to be at 1.


9 per cent for the year.

And with inflation at 2.1 per cent, the cost of living is now rising faster than the take-home pay of many Australians.

Public sector wages are growing faster than those in the private sector.

And nationwide, Western Australia recorded the lowest wages growth, with Tasmania the highest.

Labor’s Treasury spokesman, Chris Bowen, says it’s a tough time for Australians.

“This is a time when wages growth is at record lows. In fact, today’s data confirms that wages growth remains at record lows and now, that wages are growing more slowly than the increase in the cost of living. Real wages in Australia are going backwards.”

Official figures show the mining industry was one of the worst performers with wages rising just 0.6 of one per cent.

In the public sector, professional, scientific and technical services recorded the lowest quarterly wages growth of 0.2 of one per cent.

Savanth Sebastian, an economist for CommSec, has this outlook.

“I think anyone wanting a pay rise in this environment has probably got to be a little more realistic. The environment we’re in is condusive to slow and weak wage growth and that’s likely to be the outcome over the next 12 months at least. It essentially means for businesses they can pass on these modest wage gains for the moment, and when profitability and activity improves hopefully we’ll get stronger wage growth down the track.”

Shane Oliver is the chief economist at AMP.

He’s told the ABC slow growth in wages, taken alongside high household debt levels, could slow down economic growth.

“That decline in real wages is another dampener for consumer spending. It’s a dampener for household income growth and it’s another reason why it’s hard to see the economy picking up just yet. Of course all of this has implications for the Reserve Bank, if we’ve got very low wages growth continuing, it’s hard to see inflation picking up on a sustained basis any time soon, which I think tells me there’s very little chance the Reserve Bank is going to raise interest rates any time soon. There’s more chance that the Reserve Bank will have to cut interest rates again.”

Savanth Sebastian agrees.

“Well if anything it means the Reserve Bank will keep rates low for an extended period of time. Wages do filter through to the inflation numbers and overall I just think it highlights that, at the moment, household debt is rising faster than household incomes. The Reserve Bank would be a little bit concerned about that. The longer it goes on, it adds more concern to the economy but for interest rates it means interest rates will be lower for longer.”

Sally McManus is the Australian Council of Trade Unions Secretary.

She says slow growth in wages and a lack of job security is affecting the lives of Australians, and not for the better.

“We see a whole generation who don’t know what a secure job is like and that’s not their choice, that’s the only jobs available and that’s not right. Then we’ve got a whole lot of other people that are seeing their jobs converted into labor-hire jobs or converted into ABN (Australian Business Number) jobs or casualised. That is affecting the stress levels of Australians. It’s also affecting their wages and it’s affecting our very way of life. If you can’t plan day-to-day because you don’t know what your hours will be, you don’t know if you’re going to have a job next week, that affects your family life, it affects our community life.”

Ms McManus has called on the federal government to do more.

“On the issue of wages growth, there’s three key things that the government can do now to do something about it. First of all, they can stop the penalty rates cuts that are due to come in on the 1st of July, that will make a huge difference. We can’t have low paid workers having their pay go backwards. Secondly, they can support a higher minimum wage, our minimum wage is now too low. And thirdly, they can show leadership. Their own employees haven’t had a pay rise for three years. They’ve had a pay freeze.”