So bad has wage stagnation become in Australia that full-time workers copped a pay cut in the year to August 2017, highlighting the spending pinch many retailers and other businesses are feeling.
Figures from the Australian Bureau of Statistics (ABS) showed that median weekly earnings for full-time employees edged up by just 1.5 per cent over the year, well below the inflation rate of 1.9 per cent.
Somewhat surprisingly, however, part-time employees enjoyed a turbocharge in their wages, rising by 3.3 per cent.
That helped to lift overall median weekly earnings to 1.9 per cent.
“The subdued earnings growth of full-time employees was particularly apparent for casual employees in 2017. The median weekly earnings of male full-time casual employees actually fell by 1 per cent, and remained unchanged for female full-time casual employees,” said Bjorn Jarvis, the ABS’ program manager for labour statistics.
Wage stagnation has been apparent for some time, not just in the last year. Between 2012 and 2017, male full-time casual workers saw their wages rise by just 0.8 per cent. That compares to 4.1 per cent in the preceding five-year period of 2007 to 2012.
This is significant given that Australia’s casual workforce increased to just over a quarter (25.1 per cent) of the entire working population, up from 23.5 per cent as of August 2012.
“This increase was driven mainly by full-time casual employees, with the overall proportion of full-time casual employees increasing from 10.3 per cent of full-time employees in August 2012 to 11.6 per cent in August 2017, Mr Jarvis said.
“The overall proportion of part-time casual employees reduced from 53.7 per cent of part-time employees in August 2012 to 53.2 per cent in August 2017.”
While not good news for employees hoping for a bigger pay packet in 2018, or for retailers holding out for a boost in consumer spending, it will be a welcome relief for borrowers.
The Reserve Bank has said it does not plan to lift interest rates until it sees a substantial and sustained rise in wages, and these figures will have many economists pondering whether to revise their predictions of rate rises to begin as early as August.
That is despite the International Monetary Fund recently forecasting a 2 percentage point rise in mortgage rates – the equivalent of eight 25 basis point rate rises – over the next four years.
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