By Lucy Hughes Jones
(Australian Associated Press)
Wages growth is grinding along at its slowest pace in nearly two decades but a rebound in employment is tipped to help offset this next year.
Total hourly rates of pay, excluding bonuses, rose by a sluggish 0.6 per cent in the September quarter, data from the Australian Bureau of Statistics shows.
The annual result held wages growth at a record low of 2.3 per cent for the third consecutive quarter, well below its long-run average of 3.5 per cent.
Workers in the education and training sector enjoyed wages growth of 3.0 per cent during the year, while those with professional, scientific, technical services, administrative and support jobs saw rises of just 1.5 per cent.
Economists said while pay packets weren’t swelling, the upside was that sluggish wages growth was helping keep more people employed.
“If wages had not been so responsive to cooling demand for labour it’s more likely than not that the unemployment rate would have risen more sharply than what we’ve observed,” Commonwealth Bank of Australia economist Gareth Aird said.
UBS economist George Tharenou said the weakness in wages growth was broad-based across industries and states, and not just confined to the mining sector.
He warned the glacial pace of wages growth is a drag on the economy in terms of weakening consumer spending and confidence.
“(But) the clear pick-up in jobs growth is providing some offsetting support to household income, and suggests wages should tick up next year,” he said.
Mr Aird added that annual wages growth is travelling at its slowest pace since the ABS series began in 1997 and is expected to persist over the next year.
The soft wages growth had helped keep a lid on inflation, enabling the Reserve Bank keep its door open for more interest rate cuts.
“We don’t expect further rate cuts given there is a growing body of evidence that indicates the necessary rebalancing in the economy is occurring under the umbrella of low interest rates and a lower Australian dollar,” he said.
“However, it’s clear that tepid price pressures will continue to keep the door ajar for further policy easing and as such the RBA is likely to keep its soft easing bias intact at the December board meeting.”
ANNUAL WAGES GROWTH BY SECTOR
* Education and training, 3.0pct
* Financial and insurance 2.7pct
* Manufacturing, healthcare, 2.6pct
* Retail trade, telecommunications, 2.5pct
* Electricity, gas, water and waste, public admin and safety, 2.4pct
* Arts and recreation, 2.3pct
* Accommodation and food, 2.2pct
* Mining, wholesale trade, transport 2.1pct
* Real estate, 2.0pct
* Construction, 1.7pct
* Professional, scientific and technical, admin and support, 1.5pct