Wage increases beat inflation over 2023, ending real pay cuts   

ABC News
Feb 21 2024



In short: The Wage Price Index shows base pay went up 0.9 per cent in the December quarter and 4.2 per cent over the year.
That marginally exceeded the consumer price rise of 4.1 per cent over the year to December, meaning employees saw a small annual real pay rise for the first time since March 2021.
What's next? The Reserve Bank will consider the strength of wage growth when it holds its next interest rate setting meeting in mid-March.
Australian workers enjoyed a real annual pay increase last year for the first time in almost three years, data from the Australian Bureau of Statistics (ABS) show.

The Wage Price Index (WPI) shows average base pay rose 0.9 per cent in the December quarter, leading to an annual increase of 4.2 per cent over 2023.

Both the quarterly and annual increases exceeded inflation, which came in at 0.6 per cent in the December quarter and 4.1 per cent for the year to December, according to the Consumer Price Index (CPI).

The last time annual wages growth exceeded annual inflation was the March quarter of 2021.

The 4.2 per cent annual wage growth is the best recorded since March 2009, also 4.2 per cent.

Economists surveyed by Reuters typically expected base pay packets to increase by 0.9 per cent in the December quarter and 4.1 per cent over the past year.

The good news for workers is that most economists expect wage growth to remain around this level for the rest of the year.

"The labour market is starting to slacken, which will ultimately weigh on wage growth," noted Sean Langcake from Oxford Economics Australia.

"But there is a good deal of catch-up growth to come through the wage-setting system, and the labour market still remains in a tight position.

"We expect WPI growth will remain around this quarter-on-quarter pace of 0.8-0.9 per cent through 2024."

Public sector pay catch-up boosts wage index
The economy-wide pay increase was boosted by public sector workers, who saw their biggest quarterly pay rise in 15 years after many jurisdictions dropped or loosened wage cap policies.

"Higher growth in the public sector was primarily due to newly implemented enterprise agreements for essential workers in the health care and social assistance and education and training industries following changes to state-based wages policies," noted ABS head of price statistics Michelle Marquardt.

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worker smooths concrete at a slab pour with other workers in background.
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Public sector wages were up 1.3 per cent in the quarter and 4.3 per cent over the past year, seasonally adjusted, edging out private sector pay rises of 0.9 and 4.2 per cent, respectively.

Abhijit Surya from Capital Economics said that was a slight fall in annual private sector wage growth from the previous quarter.

"The share of jobs in the private sector that received a pay hike fell to just 16 per cent in Q4 [fourth quarter], down sharply from 49 per cent in Q3 and from 21 per cent in Q4 2022," he noted.

"And with the sharp increase in award wages behind us, the average pay increment for those who did receive one fell to 4.4 per cent in Q4, down from 5.8 per cent in Q3, although still above the 4.0 per cent figure recorded in the year-earlier period."

Mr Surya said the Reserve Bank will be focused much more on private sector wage moves, as those are both more sensitive to interest rates and also have a greater impact on the Consumer Price Index, which the RBA is trying to get back to annual growth of 2.5 per cent.

"While wage growth won't fall below 4 per cent until the second half of the year, an improvement in productivity growth means that it should nonetheless be consistent with inflation returning to the RBA's 2-3 per cent target," he added.

"The upshot is that we're sticking with our view that the RBA is done hiking rates."

'Encouraging numbers' or 'thin edge of the wedge'?
Treasurer Jim Chalmers said the numbers were "very welcome and very encouraging" with real wage growth returning ahead of Treasury forecasts, while accusing the Liberals of overseeing "a decade of deliberate wage suppression and stagnation" while in government.   

A close up of Jim speaking in a suit and orange tie outside a building during the day.
Federal treasurer Jim Chalmers says real wages were falling 3.4 per cent when Labor came into office.
"This is the first time since 2018 we've seen three consecutive quarters of real wages growth," he observed.   

"Since the election, nominal wages have been growing at an annualised average of 4.0 per cent, compared to 2.2 per cent for our predecessors. 

"This is a substantial turnaround in just 18 months."

Shadow Minster for Employment and Workplace Relations Michaelia Cash argued the government's recent changes to industrial relations laws threatened to undermine long-term wage growth and employment. 
I wonder is any of this secret code for wage cuts?.   

Laugh till you cry wrote on Mar 11^th, 2024 at 2:24pm:



and profit growth?

whiteknight wrote on Mar 11^th, 2024 at 1:06pm:



The Federal government forged on with its socialist experiment via the industrial relations legislation in the full knowledge that what they were doing was undertaking unprecedented actions at the time of a Reserve Bank squeeze on the economy. Albanese was either oblivious of the dangers or did not care. He had once chance to deliver for ALP financiers, unions, and took it.

Meanwhile, the numbers under rent and mortgage stress are increasing as it spreads into what were affluent areas. In Victoria, the tax attack on holiday homes and landlords is relentless and the number of unsold holiday homes grows. The number of investment properties decline.

In this calm before the storm, companies are realising they have three choices – lower profits; increase prices to maintain margins or become more productive through retrenchment our better organisational structures. If it is to be the third choice, then the impending IR legislation means action must be swift. Telstra showed the way.

Accordingly, given there is increased nervousness now about lifting prices, the period of sitting back and waiting and see what happens will not last long. Boards will require management to act. My guess is that on August 26 when the industrial relations act comes into operation will make August the month when companies that can’t lift prices will stop sitting back and watching and will take action. There will be a wave of retrenchments of some magnitude.

Banks warn us that if unemployment gets to five per cent (it’s currently around 4.1 per cent) then we will see falling property prices and a much deeper crisis. That would leave the way open for an interest-rate cut later this year.

But as I have pointed out many times our interest rates are significantly lower than the US and other developed countries, so if we are not careful our dollar will be the subject of a market raid if we cut interest rates too far. This week, we are seeing Japan’s central bank supporting the yen because traders have been hitting the currency. Australia is a much better target.

ROBERT GOTTLIEBSEN 
BUSINESS COLUMNIST

whiteknight wrote on Mar 11^th, 2024 at 1:06pm:


Massive Real but Hidden Unemployment and Part-time Jobs pretending to be jobs....

Need more tradies to build them houses.... well - what a surprise.....  they can live in tents or forty to a room until the developments are finished and the profits in, just at the point where the business 'fails' leaving the bosses with millions and banks with losses that they then foist on the general public via fees and charges...

Anyway - what difference will any house building make when most of it will be grabbed by 'investors' and home owners will be left out in the cold again......