Disappointing wage growth misses Budget forecasts again

The Australian Bureau of Statistics (ABS) has just released its Labor Price Index for the June quarter of 2019, which revealed more disappointing wages growth:

According to the ABS, wages grew by just 0.61% (s.a.) and 0.53% (trend) in the June quarter. Private sector wages grew by 0.54% (both s.a. and trend) over the quarter, whereas public sector wages grew by 0.82% (s.a. ) and 0.60% (trend).

Over the year, total wages grew by just 2.58% (s.a.) and 2.33% (trend), with the private sector experiencing just 2.26% (both s.a. and trend) growth and public sector wages growing by 2.58% (s.a.) and 2.50% (trend) growth.

You can see from the next chart, which plots non-seasonally adjusted wages growth on an annual basis (in order to reduce volatility), that wages growth is soft everywhere, but is strongest in VIC (2.9%) and weakest in WA (1.6%):

In a similar vein, wages growth is weak across most industries, with the exception of Healthcare (+3.3%):

Wages growth has fallen well below the 2019 Federal Budget forecast, which also predicts a wages explosion over coming years:

With the key economic growth drivers weakening, mass immigration ongoing, and the labour market softening, wage growth will continue to disappoint.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Latest posts by Leith van Onselen (see all)

Comments are hidden for Membership Subscribers only.