Congratulations to federal Treasury (and Treasurer Scott Morrison): you've extended your run of getting wage forecasts wrong to an amazing six years straight. The June quarter Wage Price Index yesterday showed both trend and seasonally adjusted wages growth in 2017-18 of 2.1%. The 2017 budget predicted 2.5%, MYEFO downgraded that to 2.25%, and that still proved too optimistic (see update below). What was that line about doing something over and over and expecting the result to be different?
The trend quarterly result for the June quarter was just 0.5%; in seasonally adjusted terms, 0.6% -- the same numbers we've been seeing every quarter for years now. Private sector workers had annual growth of 2% compared to 2.4% in the public sector, meaning private sector workers went backwards in real terms through the year given CPI growth of 2.1%. Public sector wages in Victoria were the only wages to grow faster than 3% anywhere; if not for Daniel Andrews' generosity to public servants (is there an election in the offing?), overall growth might have slipped below 2%. Wage growth in WA and the Northern Territory was well behind inflation at just 1.5%.