Wage growth improving

There are a couple of stories about wages in the news this morning. It is likely to remain a hot topic.

• The job-search portal SEEK releases a measure of wage growth based on advertised salaries for job vacancies. Its seasonally adjusted index for July showed a 4.1% annual rise which is a significant increase on the official WPI for Q2 at 2.6%, according to Bloomberg. The index ran at around 2.2% before the pandemic.
• The SEEK measure suggests that employers are having to increase their pay offers to attract staff, consistent with tight labour market measures. This has the potential to feed through to existing employees in this environment.
• Given the constraints of the WPI and its lack of timeliness, the RBA is likely to be looking at other measures of wage inflation, such as this one and surveys.
• The Australian reports that small business and the ACTU have agreed on an arrangement that allows multi-firm wage bargaining and “a simpler test for approving pay deals that could ultimately apply across the rest of the workforce.”
• Small businesses have been struggling with the complexity of the current wage bargaining system and this would give them a simpler alternative to the current system. It remains to be seen the impact it’s likely to have on wages growth in the sector.
• The Sydney Morning Herald is talking about how the federal government is looking at the ACTU’s proposal of industry-wide wage bargaining to close the gender pay gap in low-paid female-dominated sectors, such as aged care and childcare.
• There is concern from business organizations regarding the union’s proposal for industry-wide bargaining and that the unions will dominate this week’s jobs summit. But the discussion ahead of the conference is definitely in the direction of pushing up Australia’s wages and the RBA is likely to be looking closely to see by how much.