Two speed wages

By Leith van Onselen

The Australian Bureau of Statistics (ABS) has just released the labour price index for the March quarter of 2012. According to the ABS, in trend terms total wages (excluding bonuses) increased by 0.9% over the quarter, with private sector wages rising by 0.9% and public sector wages increasing by 0.7%. The outcome just beat analysts expectations, who had been expecting wages to grow by 0.8% over the quarter.

Over the year, total wages (excluding bonuses) have increased by 3.5% in trend terms, with private sector wages rising by 3.7% and public sector wages growing by 3.1%.

A chart plotting the growth rates over time is presented below.

For me, the most interesting aspect of this chart is that public sector wages had until recently grown at a faster rate than private sector wages. As expected, public sector wages growth is also far more stable, experiencing little downwards adjustment during the Global Financial Crisis, although it has started to trend down recently as state governments began trimming their budgets.

At the state level, data is only provided in original (non-seasonally adjusted) terms, which makes it very volatile. Accordingly, the below chart tracks wages growth in the mainland states on a six month moving average basis:

Not surprisingly, wages growth in Australia’s resources capital, Western Australia, has typically exceeded the national average. And reflecting this fact, wages in the mining and construction sectors – which are both dominated by Western Australia – have also grown the fastest over the life of the series:

If you look closely at the above chart you will see that wage growth in every major sector, with the exception of mining, has decelerated in the March quarter. Mining wages growth has also grown at a rate well above average since Australia’s commodity price boom commenced, increasing by 47% since March 2004 versus 35% for the economy as a whole:

[email protected]

www.twitter.com/Leithvo

Unconventional Economist
Latest posts by Unconventional Economist (see all)

Comments

    • Nice set of numbers for WA resources (and construction) but the wrong coloured dirt. 🙂

      • Nice set of numbers for WA resources

        Telling us repeatedly how well you’re doing really isn’t helping your cause.

        • Lorax. What’s your problem. This is excellent news for workers in the resource related sectors. It may or may not last. At present there are thousands of jobs available. Make the move. Anyway – let’s just enjoy the time in the sun. I know I do.

          • My problem? You come here day in, day out, telling us all how wonderful things are for you in WA, when clearly things aren’t so fabulous “over east” where most of us live. The RBA cut 50bps for a reason, I doubt the Reserve Bank of WA would have done the same.

            If you guys are all doing so well over there, you can clearly afford to pay more tax, and we’ll have some of those “fiscal transfers” Ken Henry talks about over here thank you.

            Make the move? FFS! Mining will never employ more than a few percent of the workforce, and most people (me included) have kids and family that prevent us moving even if we wanted to participate in your dirt digging bonanza. Besides, why you’d want to spend your days in some God-forsaken hell hole*, raping and pillaging the Earth, I don’t know!

            *I include Perth in this category.

          • Lol. What? Clearly afford to pay more tax? Now you’re suggesting a super-profits tax on workers in the resources sector! Wanting someone else to pay your way….

            Can’t help it if I concur with statistics that support what I see regarding activity here in WA, not gloating at all. I’ve been in this game long enough to know the ephemeral nature of booms.

            FIFO.

            I’m a Melbournian originally but been in Perth on and off for several years. You get used to it. Beautiful river. Beautiful beaches. And the glorious North-West.

  1. Yep, you can see the extremely close correlation in that final chart, proving that mining is indeed a fifth of the economy, and that it flows on broadly and solidly into the non-mining economy.

    Not.

    • Of course it does, in many ways. The example here is when employees in these sectors spend their hard-earned pay cheques. Flows through.

      • Flows through to some kind of void by the looks.

        I keep hearing the inference that mining is “a rising tide, lifting all boats” – pretty clear that this isn’t the case.

        Also, that sharp plunge in the growth rate of mining wages, down to join everybody else – it seems to cover the span of time when mining apparently “saved the Australian economy”. In my part of resourceville, I remember mass-layoffs in the resource sector at around that time.

        No,it’s quite clear mining just doesn’t contribute nearly as much as we’ve been led to believe. Shame really. Like I’ve said before, I have nothing against mining per se. To have a backyard filled with coal, iron ore, bauxite, gas, zinc, magnesium, etc etc is a very fortunate thing indeed. These are real, useful raw resources at our disposal and that’s good.

        But when our policy makers formulate policy on the belief that the industry contributes significantly more to economic activity than it actually does, then we may be setting ourselves up for problems.

  2. Leith, a question about that final chart of mining vs all industries – has “all industries” had mining stripped out or is mining still included in the definition of all industries, where all industries is compared against mining alone.

  3. Mining employs 249,000 people whats Australia’s labour force? Say 12,070,000.

    Mining: 2% of the labour force and it gets its own graph?