Most significant growth in Aussie wages in more than a decade
Australian workers' wages rose to the highest level in more than 10 years as the country sees a low unemployment rate and tight labour market.
The latest data by the Australian Bureau of Statistics (ABS) revealed the wage price index rose 0.8 per cent in the March quarter of 2023.
Annual pay growth rose to 3.7 per cent.
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ABS acting head of prices statistics Leigh Merrington said the annual growth is a significant indicator of Australia's job market.
"Annual wages growth of 3.7 per cent is the highest since September quarter 2012, reflecting low unemployment, a tight labour market and high inflation," Merrington said.
Merrington added the private sector was the main driver of growth for Aussie wages.
"A number of private sector industries have recorded annual wages growth above 4 per cent, with the remaining industries all above 3 per cent annual growth," Merrington said.
But the public sector recorded the highest quarterly growth in a decade of 0.9 per cent and 3 per cent annually.
It comes as enterprise agreement bargaining, scheduled rises and higher wage caps come into play for the sector.
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The data shows there are also a number of jobs receiving pay increases despite the tightening economic environment.
"Wage outcomes over the March quarter 2023 saw a continued lift in the share of jobs receiving wage rises of between 4 and 6 per cent, which is the highest share since 2009," Merrington said.
"The share of jobs with a wage rise of 2 per cent or less has fallen from over 50 per cent in mid-2021 to less than 20 per cent."
Even though wages have accelerated by 3.7 per cent in the year to March, it is well behind the rate of inflation at 7 per cent.
The question is now how rising wages will impact inflation and therefore interest rates, which the Reserve Bank of Australia has foreshadowed could rise again in June.
The central bank has forecast wages to rise between 3.5 to 4 per cent per year without sending inflation on an upward trajectory.
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However, if wages continue accelerating on the path they are on now, it would add to the bank board's concerns that inflation would be impacted and therefore strengthen the case for further rate hikes.
But Treasurer Jim Chalmers is confident inflation is not being driven by wages.
"When it comes to the cost-of-living pressures on working families, decent wage rises are part of the solution, not part of the problem," he said.
"We have an inflation challenge for a whole range of other reasons, not because people have been getting paid too much."
It comes as worker unions are calling for a 7 per cent rise in wages in line with inflation with Fair Work hearings currently underway into the matter.
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