Coronavirus Australia: Pay growth’s 23-year low: employers press pause on wage rises as COVID-19 bites

Evidence of a solid economic recovery hasn’t extended to pay packets, with pay growth dropping to a 23-year low.

Few workers enjoyed pay rises of any note over the September quarter and public and private sector employers looked to pause pay rises.

Pay growth has slumped to a record­ low after coming to a standstill over the three months to September, as the COVID-19 recession triggered wage freezes and delayed increases from enterprise bargaining agreements.

The Australian Bureau of Statistics’ wage price index inched up by 0.1 per cent, after the June quarter’s 0.2 per cent ­increase, when the health crisis and national restrictions sparked mass lay-offs.

Over the year to September, annual wage growth decelerated from 1.8 per cent to 1.4 per cent, the seasonally adjusted figures showed, the slowest in the data’s history, stretching back to 1997.

 

ABS head of price statistics Andrew Tomadini said the Septembe­r quarter was usually a period­ of “solid” wage growth. But the pandemic had squashed pay rises as “organisations continued to adjust to the economic uncertainty, recording fewer end-of-financial-year wage reviews­ and delaying enterprise bargaining agreement increases”.

“This led to a significantly reduced­ number of jobs recording wage rises when compared to previous September quarters,” he said. “Additionally, the staggered implementation schedule of the Fair Work Commission annual wage review moved some regular September-quarter wage rises to later quarters.”

Stalling public sector pay accounte­d for the overall slowdown in wages growth in the quarter, as state and federal governments delayed pay increases.

Government workers’ wage rises over the three months to September slowed sharply from 0.6 per cent to 0.2 per cent, bringing the annual growth rate from 2.1 per cent to 1.8 per cent.

Previously-agreed wage increases for federal and Queensland government employees have been deferred for up to 12 months. NSW public sector wages will be frozen until next year, and the cap for annual wage increases was reduced from 2.5 per cent to 1.5 per cent.

Private sector workers’ pay inched up by only 0.1 per cent for the second consecutive quarter, bringing the annual pace down from 1.7 per cent to 1.2 per cent.

In non-seasonally adjusted terms, only three sectors recorded annual wage rises of more than 2 per cent, led by education and financial services, where pay climbed by 2.4 per cent over the 12 months to September, and by 0.5 per cent and 0.6 per cent, respectively­, over the quarter.

The hard-hit hospitality ­industry and the administrative and support services sector ­recorded the lowest year-on-year rise, 0.5 per cent.