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Real wages in Australia continue to go backwards

Last week, two major wage data releases came out from the Australian Bureau of Statistics. On Wednesday (February, 24, 2021), the – Wage Price Index, Australia – which was followed on Thursday (February 25, 2021) by the latest – Average Weekly Earnings, Australia. The two series are quite different as I note below. Both demonstrate poor wages outcomes in Australia. The ABS reported that Australia “maintained the historically low annual growth rate of 1.4 per cent for a second quarter” and that the data “showed a large proportion of the private sector wage growth came from the continued restoration of hourly wages back to pre-pandemic levels”. In other words, the cuts firms got away with last year were restored, which is a different thing to on-going growth. Private sector grow was just 0.7 per cent and public sector growth was just 0.3 per cent. The overall WPI growth was just 0.6 per cent. The public sector is clearly not demonstrating leadership with their ridiculous wage freezes and wage caps stifling wages growth not only in the public sector but also via the spillover effects to the private sector. With the quarterly inflation in the December-quarter was recorded at 0.22 per cent, real wages thus rose for Australian workers. But if we consider the annual movements private sector wages grew by 1.4 per cent while annual inflation (excluding volatile items) was 1.5 per cent, so real wages fell over the year to December 2020. Further, over the longer period, real wages growth is still running well behind the growth in GDP per hour (productivity), which has allowed profits to secure a substantially increased share of national income.

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