Real wages are falling

ScreenHunter_28 Jun. 12 16.40

By Leith van Onselen

As noted earlier, figures released today by the ABS revealed that Australian wages growth slowed to the slowest pace on record (1997) in the December quarter, clocking it at only 2.6% (s.a.) and 2.5% (trend):

ScreenHunter_1322 Feb. 19 11.36

 

When adjusted for underlying inflation, Australian wages actually fell in the year to December – the first decline in real wages since the Global Financial Crisis (see below charts).

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As noted by Matt Cowgill today, there is a strong correlation between wages growth and full-time jobs, which suggests that real wages will continue to fall in the near term (see next chart).

ScreenHunter_1325 Feb. 19 12.03

The unpleasant reality is that real wages will need to continue falling for Australia to regain its competitiveness (although labour costs are by no means the only factor). Without such an adjustment, trade-exposed local firms will continue to shutter, slashing employment.

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Comments

  1. I wonder when Kochie will bring back the recession dancers to sunrise. They worked so well during the GFC. If I had to guess I would say when Shell shuts the refinery in Geelong.

  2. Wages are falling – who cares, as long as house prices keep rising. That’s the most important thing, and as we’ve seen in recent years rising property prices are not reliant on rising wages anyway.

    • Spot on. You’d think the un/underemployed in this country have a huge propensity for property investment. The masses will love it though. Any bad news will keep rates low and the party continues.

  3. Gee, weren’t wages soaring, going sky-high, like Tony Abbott, Joe Hockey, Herr Eric Abetz, David Llewellyn-Smith and Paul Howes said?

  4. The green army in Geelong working for $5 an hour on work for the dole schemes as part of Tony’s MIRACLE on jobs creation will sort this out.

    Can we get some figures on Detroit housing costs compared to Geelongs’.

    Think Geelong is going to drastically outpace Detroit in the race to ghetto city.

  5. boomengineeringMEMBER

    If as I’ve said before companies choose personality over competence then profits will go down along with wages