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Scott Morrison chats to a worker as he visits the Beefy's Pies factory. Image credit: Dan Peled/AAP

Despite inevitable efforts to spin yesterday’s wage price index numbers from the Australian Bureau of Statistics (ABS) as heralding the return of wages growth, the numbers confirm that Australia’s private sector workers are enduring their sixth straight year of minimal real wage rises.

In the September quarter, wages rose just 0.6% and 2.3% in the year to September, seasonally adjusted. But private sector wages rose by only 0.5%, the same result as every quarter stretching back to 2016 and just 0.1% above inflation in the September quarter. In trend terms, real wages for private sector workers are stuck in the same rut they’ve been in since 2013, with incomes growing by 0.5% or less a year.

As has been the case now several quarters, the fast-growing public sectors of health and education were responsible for what little growth there was across the year to September, with another heavily public sector, utilities, also contributing significantly. Health and social care, by far Australia’s biggest employer, recorded 1.4% growth, in effect single-handedly propping up wages growth across the economy. The finance and construction sectors — the latter supposedly subject to the depredations of the militant CFMMEU — were the worst performing sectors with growth of 0.4% and 0.5% respectively in the quarter.

And what little private wages growth there was may have been due to the national wage case decision earlier this year (which the government opposed) to increase Australia’s minimum wage by 3.5% increase, although the 3.3% national wage rise in 2017 had little impact on wages last year. Complicating matters this year is the abolition of many penalty rates for some workers in retail, hospitality and the pharmacy sectors. Around 700,000 people are estimated to have been affected by the penalties cut, which will have partly offset the national wage rise.

The Andrews government’s effort to buy the votes of public servants in Victoria is reflected in the numbers, with Victoria recording a whopping 3.3% growth in public sector wages through the year, but the NSW government — facing an election in March — has now taken over the role of bribing bureaucrats, with a 1.5% public sector wage rise in the September quarter alone. Mining-dependent Western Australia continues to bring up the rear, while Tasmania took the honours for private sector growth of 1.9% in the September quarter.

The AMP’s chief economist Shane Oliver summed it up nicely in a commentary on Wednesday afternoon:

The good news is that wages growth has continued to lift from its 2016 low point of 1.9% year on year. However, the lift in wages growth largely owes to a faster increase in the minimum wage for 2017-18 of 3.3% which was up from 2.4% for the previous year and now to a rise of 3.5% for this financial year. Were it not for the acceleration in minimum wage increases wages growth would still be running at around 2% so there is still little evidence of significant pick up in underlying wages growth.

The lessons around wages growth remain the same: corporations in the private sector continue to suppress wages, while more heavily unionised and fast-growing public sectors like health are the ones driving what passes for wages growth for Aussie workers. Private sector companies of all sizes continue to make good — and often record — profits, especially those in the export and services sectors. The suppressed wage growth for private sector employees continues to support those record profits, bigger dividends and in a growing number of cases, share buybacks for shareholders to profit. It’s a great time to be in business. Not so flash to be a worker.

Peter Fray

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