Australian wages accelerated at the fastest pace in over 14 years in the three months through September and reached the Reserve Bank’s forecast peak, while still remaining well below the inflation rate. So in real terms average Australian wages continue to go backwards, against inflation at 5.4%. And productivity improvements are nowhere to be seen, as migration continues at a record pace and unit labour costs rise.
The ABS says the Wage Price Index rose 4% in the third quarter from a year earlier, above economists’ expectations of 3.9% and matching the RBA’s forecast for year’s end, On a quarterly basis, wages grew 1.3%, the highest in the 26-year history of the index.
Annually, seasonally adjusted private sector wages growth was higher than the public sector (4.2% compared to 3.5%). This was the highest annual growth for the private sector since December quarter 2008 and for the public sector since June 2011.
One of the reasons that economists expect Australia will avoid the sort of wage-price spiral that has erupted in some other developed countries is surging immigration that is boosting labor supply and likely reducing the bargaining power of employees.
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