The Australian Bureau of Statistics (ABS) has released its latest Wage Price Index (WPI) on Wednesday, revealing that wages are on the rise after businesses experienced labour market disruptions in 2020 and early 2021.
The WPI recorded a 0.6% wage increase in the September quarter of 2021, bringing the annual growth rate to 2.2% – back to its pre-pandemic patterns. In particular, the private sector edged up 0.6%, with the public sector following closely at 0.5% in the same period.
Harley Dale, chief economist at CreditorWatch, said both figures were in line with expectations of a post-pandemic Australia.
“Wages grew a smidgen above inflation, given the Consumer Price Index came in at 2.1%,” Dale said. “As per the playbook in recent quarters, the pace of growth in the private sector outweighed that for the public sector so, in real terms, public sector wages are still going backwards.”
Professional, scientific and technical services have the highest annual wage growth at 3.4%, followed by construction at 2.6% and accommodation and food services at 2.5%. It is clear that more organizations are looking to attract and retain employees to prevent mass turnovers and skills shortages by offering higher compensation.
On the other hand, the mining industry recorded the lowest quarterly rise at just 0.4%.
The Reserve Bank of Australia (RBA) is waiting for most wages to go past the current 3% mark before it will be comfortable that inflation is within its 2% to 3% target band, which might not happen until late 2023. Still, Dale said the economy is “moving in the right direction.”
“The RBA will be heartened by these results, but they will need to see considerable more growth before they change the timing of whatever they have in mind for a first rise in the Official Cash Rate (OCR),” Dale said.