‘Jobs and growth’ was the slogan for the Turnbull government in the 2016 election race. And while there has been jobs growth — 400,000 new jobs in fact — wages remain stagnant.
With jobs growth, one may think that also lends itself to wage growth. Yet that hasn’t been the case so far.
According to the ABC, the government believes that the unemployment decline will increase wages; well, that was their plan, anyway. With the latest wage price index (WPI) figure set to be released this week, it doesn’t look like it’ll get worse for Aussie workers. That doesn’t necessarily mean it’ll get better, either.
And with rising household costs, it’s a wonder the economy isn’t doing any worse.
According to the ABC, the WPI will show growth of 0.5% for the past quarter, and a 2% growth for the year to date. And while that’s ‘growth’ in literal terms, it doesn’t help Aussie households all that much.
The economic team at Macquarie Bank noted recently:
‘While wages growth appears to have broadly found a base, we remain concerned about near-term outcomes given average wages growth in newly negotiated collective bargaining agreements appears to be even lower than the agreements they replace.’
With Aussies desperate for work, they’ve negotiated their wages down. This is evident in the graphs below:
Source: Thomson Reuters Datastream, ABS, ABC News
So while wages haven’t increased, the Reserve Bank of Australia’s assistant governor Luci Ellis stated that businesses were using other strategies to keep their staff:
‘…we hear that firms are increasingly using other creative ways to attract and keep staff…
‘These include everything from hiring bonuses, to offering extra hours, to increasing perks and workplace conditions.’
And while businesses are happy to negotiate extra incentives to keep their staff, they are still very concerned about rising costs. Meaning that the everyday worker misses out on wage increases.
While wage growth remains minimal, and businesses are coming up with creative ways to keep their staff, that won’t last forever. Workers won’t be satisfied forever with these incentives; as a result, wages will grow. It’s just a matter of when.