The latest release of the wages data from the Australian Bureau of Statistics shows that our wages are now growing slower than ever recorded. Worse is that even while jobs around the nation (except for in Victoria) look to have at least stabilised, this new low wages growth might be the best for years to come.
There is some sort of gallows humour in looking at old economic predictions. In last year’s budget the government ludicrously predicted by June this year wages would be growing at an annual rate of 2.75%. By December they had lowered that prediction to 2.5%. That was still well beyond what anyone realistically thought would occur, but it is nice to be optimistic I guess (especially when you are basing you budget number on that optimism).
By July’s budget update, the Treasury predicted wage growth in the 12 months to June this year would be 1.75% and they were spot on, proving I guess that the Treasury can accurately predict the recent past.
The June quarter saw the lowest wages growth every recorded.
Private sector wages grew just 0.1% in the June quarter – absolutely destroying the previous record low of 0.4%.
The private sector annual wage growth of just 1.7% was also the lowest ever recorded as was the 2.1% growth in the public sector.
None of this is much of a shock. And neither is it expected to be short-lived. The Reserve Bank is currently predicting annual wages growth to stay below 1.75% until the end of 2022 at least – falling to 1.25% by the end of this year and through most of next year.
So Wednesday’s figures might be historically bad, but sadly they are also likely to be the best we will see for a while.
And it comes off the back of the latest payroll jobs figures which showed a very small increase in jobs in the last week of July, but mostly flat job growth through the month.
Victoria, not surprisingly is suffering the most – a 1.5% drop in the number of jobs in July, while South Australia, Western Australia and Queensland saw jobs rise.
The impact of the second wave in Melbourne is clear from the progression of payroll job numbers since February. It is now clearly the worst-performing state, and given these latest figures do not include the stage 4 lockdown period, worse is to come.
But even when we consider the national picture is better than it was, we need to remind ourselves how far we have yet to go.
Only two of the past 14 weeks have seen jobs numbers across the nation fall, and yet there remains 4.3% fewer jobs now than at the start of March – equivalent to around 650,000 fewer jobs.
One interesting aspect is that since the middle of April, when the national lockdown was at its most stringent, the number of women – especially younger women – in jobs has risen markedly.
This is because the industry that has most “recovered” since that nadir is the accommodation and food services industry – which employs a large percentage of young women.
But overall the pandemic has mostly hit younger and older workers – with both men and women in their 20s suffering the biggest job losses since March among those under retirement age.
And what we have seen in Victoria is that as with the early stages of the pandemic, once again lockdown most greatly affects the hospitality industry.
Throughout July across all of Australia there was a strong increase in accommodation and food services jobs – from a 1.3% increase in the ACT to 6.6% in Queensland, 7.1% in South Australia and a whopping 15.6% in the Northern Territory.
But in Victoria, jobs in that industry fell 8.1%.
And as a result, while elsewhere there was strong growth of jobs for teenagers, in Victoria their jobs were smashed – down 4.1%.
The figures highlight that the recovery will be extremely bumpy and insecure for younger workers. Any tightening of restrictions will assuredly see them to be the first to lose work. But for all of us, we have a long period of our wages barely growing at all.
It is now seven years since private sector wages grew by more than 3% in a year; and no one expects to see such previously average growth any time soon.