Australian wages growing more slowly than cost of living

Australia's employment picture has rebounded in recent months, with full-time jobs gaining at a steady rate.

It's not looking good on the wages front, with new data out today expected to show real growth has fallen into negative territory, behind the cost of living. The latest Australian Bureau of Statistics data shows about 7,500 (seasonally adjusted) more WA women found jobs in April, taking the number employed to just more than 605,000.

"Wages growth is slow and is expected to rise only gradually", Commonwealth Bank economist Kristina Clifton said.

It indicated this week it would look at both the housing market and employment growth as guides to the outlook for interest rates, which have been on hold since August a year ago.

The central bank has remained on the sidelines since last summer, with the official cash rate holding at a record low of 1.5%.

Australian wages are rising at their slowest pace on record at a time when household debt has climbed to an all-time peak, putting a lid on spending and a drag on the course of inflation.

"Workers simply have no bargaining power".

"Ongoing record low wages growth also underlines the risk that the government won't see the doubling in wages growth it assumed in the Budget over the next four years and as a result government revenue growth will disappoint further".

The wage price index rose just 0.5 percent in the January-March quarter. However, fourth quarter reading was revised lower to 0.4 percent sequentially. The problem is that the high underemployment rate means businesses can get away with paltry pay rises as they know someone else is willing to do their job.

Wage hikes were better in the public sector at 2.4 percent compared with 1.8 percent in the private sector.

THE unemployment rate in the north is at its lowest level for nine years, but the number of those in employment has dropped significantly in the last quarter according to the latest figures.

In the private sector, electricity, gas, water and waste services recorded the highest quarterly rise of 0.7%, and accommodation and food services recorded the lowest growth over the quarter (0.1%). But wage growth in Western Australia fell from 1.4% to 1.2% and in the mining sector it slipped from 1.4% to 0.6%.

Vanessa Coleman

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