Annual wages hit their highest level since mid-2019 last year, but at 2.3% they are still far behind the rate of inflation.
The Australian Bureau of Statistics said its wage price index rose 0.7% in the December quarter, up 2.3% from a year earlier and up from 2.2% in the December quarter. September.
The ABS said annual wage growth continued to rise steadily from the record low of 1.4% seen at the end of 2020, when the economy was recovering from the first recession in nearly 30 years.
But wage growth is still below the rate of inflation, which currently stands at 3.5 percent.
“It confirms once again that Scott Morrison is the premier for higher prices, lower real wages and backsliding working families,” shadow treasurer Jim Chalmers told AAP.
“The Prime Minister and Treasurer’s self-congratulations on the recovery ring hollow when working families in real communities are falling behind.”
The ACTU calculates that Australians on the average income of $68,000 actually received a pay cut of $832 last year.
“Workers have taken the worst real pay cut in 20 years, and Scott Morrison has no answer,” ACTU Secretary Sally McManus said.
But the chief executive of the Australian Chamber of Commerce and Industry, Andrew McKellar, said it was essential that increased productivity drove wage growth in 2022.
“The reality is that our productivity performance remains concerning,” he said.
“Until we improve our economic efficiency, we won’t see the stable and sustainable increase in wages that the community expects.”
Annual wage growth is also well below the 3% higher Reserve Bank of Australia Governor Philip Lowe wants to see before raising the cash rate by a record 0.1%.
“There are positive signs in this data that wage growth is accelerating in response to stronger economic conditions,” said Sean Langcake, head of macroeconomic forecasts at BIS Oxford Economists.
“But progress is slow and wage growth is still well below the pace the RBA considers consistent with sustained inflation on target.”
As such, he does not expect the first rate hike to come in the last three months of 2022.
ABS head of price statistics Michelle Marquardt said the proportion of wage increases reported in the December quarter was higher than usually seen at this time of year.
“Implementation of the latest phases of state-based public sector company awards and agreements updates, in addition to a growing number of wage and salary reviews, has pushed up wages by 0.7% in the quarter,” she said.
Meanwhile, construction work completed in the December quarter unexpectedly fell 0.4% as economists expected a rebound from Delta’s lockdown-induced plunge in the December quarter. September.
Total construction was $53.5 billion in the quarter.
Building construction fell 1.3% to $30.4 billion, reflecting a 2.9% drop in residential activity but a 1.3% rise in non-residential construction .
Engineering rose 0.7% to $23.1 billion.
The data feed into the national accounts for the December quarter which are to be released on March 2.
Australian Associated Press