A stronger-than-expected increase in private sector pay over the last three months of 2020 has kept wage growth above (very low) economist expectations.
- Wages increased an average of 0.6 per cent in the December quarter and 1.4 per cent last year
- Many workers reliant on award wage increases only received their annual pay rise on February 1, 2021
- Victorians saw the biggest increase in wages in the December quarter, having lagged behind during the state’s second lock-down
Australians’ pay packets rose an average of 0.6 per cent over the last three months of last year, double the 0.3 per cent expected by most economists.
Unusually, it was the private sector that led pay rises, with wage gains of 0.7 per cent, seasonally adjusted, while public sector wages edged just 0.3 per cent higher.
However, wage growth over the year remained at a record low of 1.4 per cent, and the ABS’s head of price statistics, Michelle Marquardt, said that was unlikely to change in a hurry.
“December quarter’s moderate growth was influenced by businesses rolling back short-term wage reductions, returning wages to pre-COVID levels,” she noted.
“The phased implementation of the Fair Work Commission annual wage review also had a small positive impact on wages.”
Many workers in those industries deemed hardest hit by the pandemic have only just received their annual award pay increases from February 1, including those employed in hospitality, arts and recreation, aviation, retail and tourism.
Public sector pay freezes also dragged on wages growth overall.
“Wage freezes have had an impact on the public sector which recorded its lowest annual increase (1.6 per cent) since the commencement of the series,” Ms Marquardt said.
She explained that regions and sectors that were recovering from pay cuts had the strongest December quarter figures, with professional, scientific and technical workers booking a 1.2 per cent increase after suffering a half a per cent fall in wages in the June quarter.
Victoria, reopening after a second lockdown, recorded the strongest December quarter wage growth of 0.7 per cent.