There are signs wage pressures are beginning to build in the economy after the national wage price index increased for the second consecutive quarter in late 2017.
In the December quarter, seasonally adjusted wages rose by 0.6 per cent, to post a 2.1 per cent increase for the year.
“The annual rate of wage growth has increased for the second consecutive quarter reflecting falling unemployment and underemployment rates, and increasing job vacancy levels,” said ABS chief economist Bruce Hockman.
However, much of the increase came from the public sector, where wages rose by 2.4 per cent. The private sector saw more sluggish growth of 1.9 per cent.
Wage growth was fastest in Victoria, up 2.4 per cent, while the 1.1 per cent growth rate in the Northern Territory saw it take home the wooden spoon.
The figures from the Australian Bureau of Statistics (ABS) come just a week after separate data revealed a seven-year high in the workforce participation rate, and an all-time high in the proportion of women in the workforce.
Australia’s unemployment rate remains at 5.5 per cent although rising wages, coupled with a strong 15 per cent surge in job listings in January, suggest that may fall over the coming months.
“It’s early stages but this could be the start of a gradual pickup following recent strong jobs growth,” said James Pearson, CEO of the Australian Chamber of Commerce and Industry (ACCI).
“While there is still significant slack in the labour market that needs to be taken up, largely from high rates of underutilisation, over time we think this will improve. If the economy continues to improve, if profit growth can be sustained and jobs growth remains strong, if we see a sustained lift in productivity, then wage growth will lift.”
Mr Pearson added: “That’s still a lot of ‘ifs’ but today’s result gives us greater confidence in that view.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.