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Inflation & Tight Labour Market Also Drove Higher Q3 Wages


The Q3 WPI came in close to expectations rising 1.3% q/q and 4% y/y after an upwardly-revised 0.9% and 3.6% y/y. Q3 last year rose 0.9% q/q and the difference reflects not only higher minimum award wage increases but also “widespread increases in average hourly wages” with Q3 2023 the highest quarterly rise since the series began in 1997. This was not just because of government decisions but also due to high inflation and the tight labour market. This could become a concern if it continues.

  • The WPI excludes bonuses and other one off benefits and so doesn’t truly reflect the impact of the tight labour market and inflation on take home pay. Data in the national accounts on December 6 will help with this as well as including productivity/unit labour cost to gauge the inflationary impact.
  • Almost half of private sector jobs saw a Q3 pay increase with the average rise around 5.8% compared with 34% and 3.3% for the public sector. This is seasonal but 46% of private jobs had a rise in Q3 2022 averaging 4.3%, lower than 2023. 40% of Q3 2023 increases were above 4% with 13% above 6%.
Australia wages growth ex bonuses

Source: MNI - Market News/ABS/SEEK

  • Private sector wages rose 1.4% q/q and 4.2% y/y up from 3.9%, which according to the ABS was driven by the Fair Work Commission’s wage review and the 15% rise for aged care workers. It also cites the tight labour market and high inflation being “factored into wage” decisions” as reasons for strong private wage growth.
  • Public sector wages continued to underperform rising 0.9% q/q but the annual rate picked up to 3.5% from 3.1% helped by the end of state wage caps.
  • Awards, enterprise and individual pay agreements contributed to the rise, especially the latter.
Australia public vs private average pay ex bonuses y/y%

Source: MNI - Market News/ABS

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