Wage growth remain completely flat in the year to June, wage price index data from the Australian Bureau of Statistics showed on Wednesday. 

The wage price index grew 0.5% in the June quarter and 1.9% in the year to June, seasonally adjusted, matching the June annual inflation result, meaning there was no real wages growth during the year. The results are exactly the same as the March and December 2016 quarters.

For private sector workers, however, growth was lower at 0.4% and 1.8% seasonally adjusted, meaning they had a small real wage cut. Again, the numbers are the same as those for most of the 2016-17 year; the ABS described the private sector numbers as “the longest period of low growth so far in the series”. 

The reason for continued stagnation of wages has eluded policymakers and commentators, with many insisting wage growth will simply bounce back and some linking it to productivity growth. There is no evidence yet of such a bounce, and some commentators might need to think about working out a new story. That’s also the government’s strategy on the issue. In the 2016-17 budget, the government confidently predicted 2.5% wages growth for this year. By the time of this year’s budget, that prediction had fallen to 2% — still too high. The budget predicted that wages would surge to 2.5% growth in the current financial year — the same as the ill-fated 2016 prediction.

One of the few sectors to record strong growth was health and social care (2.3% annual growth), which in addition to being in the public sector and more heavily unionised, meaning it has higher wages growth, is continuing to grow its workforce rapidly.

This number is important because if there’s one single piece of economic data that explains much of the discontent sweeping not just Australia but much of the West at the moment, it’s wages growth, which is stuck either at low levels despite full employment (as in the US) or at zero real growth despite low unemployment (Australia) or falling real growth in the UK and some European countries. Workers are unwilling to support market economics if it doesn’t deliver rising wages, and that’s translating into support for economic interventionists from the left and the right.

Meantime, business continues to demand that workers accept pay cuts and more “flexible” industrial relations laws …

Peter Fray

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