Thursday, February 26, 2015

Satisfied? Real wage growth is close to zero

Don't even think about asking for that big pay rise.

The latest figures from the Bureau of Statistics show wage growth has never been lower - not since the bureau began collecting accurate figures in the 1990s.

In the 12 months to December wages grew by an average of just 2.5 per cent, around the same as the Reserve Bank's long run inflation target. Four years earlier during 2010 they were growing at 3.9 per cent.

The low rate means that after inflation real wages scarcely grew.

Even in the states in which wages were climbing the fastest - Victoria, South Australia and Tasmania - they grew by just 2.7 per cent.

In NSW they grew 2.3 per cent and in the Australian Capital Territory 2.2 per cent. ACT public sector wages grew only 1.4 per cent.

The Australian government has offered defence force staff just 1.5 per cent per year, much less than inflation and the lowest pay rise on record. Staff in the department of the industrial relations minister Eric Abetz have been offered just 0.5 per cent along with cuts to conditions. Several agencies have offered nothing. The Australian Crime Commission and the Australian Research Council has proposed a rise of zero per cent.

Wages grew the slowest in the industry group the bureau calls professional, scientific and technical services, which services the mining industry. The climbed just 1.9 per cent. Wages in retail trade climbed a weak 2.2 per cent...

The biggest wage rise was 3.4 per cent, in education and training industry.

Commonwealth Securities chief economist Craig James said the low wage rises would restrain consumer spending.

"They are barely covering inflation," he said. "It might mean the Reserve Bank decides to cut rates again next week and then retires to the sidelines. Or the Reserve Bank might keep another rate cut up its sleeves in case momentum in the economy eases further."

This week's ANZ Roy Morgan consumer confidence index showed spending intentions at an eight-month low.

The Reserve Bank board cut its cash rate from 2.5 to 2.25 per cent when it met this month.  Financial markets have assigned a 42 per cent probability to another cut, to 2 per cent, when the board next meets on Tuesday.

In The Age and Sydney Morning Herald

Related Posts

. Minimal evidence against the minimum wage

. 2012. No WorkChoices, Goldilocks wages. Who'd have thought?

. 2011. Get real. Wage growth is more of a wage crawl