Victorian public sector workers enjoying higher wages growth

Victorian public sector workers enjoy wage rises almost 50 per cent above the national average, according to new figures.

Public sector pay rose 2.4 per cent nationally last year.

Victorian public sector workers enjoy wage rises almost 50 per cent above the national average, according to new figures showing typical private sector workers ­endured zero real wage growth last year.

Amid a highly charged debate about the link between company tax cuts and wages, the closely watched wage price index yesterday revealed wages had risen 0.6 per cent in the final three months of last year, leaving them 2.1 per cent higher over the year — a small improvement but still ­barely above inflation.

Treasurer Scott Morrison said the pay bump for healthcare workers, whose sector showed the biggest overall rise last year of 2.7 per cent, foreshadowed a broader rise in wages, especially if the company tax were cut.

“That’s one of the many ­impacts that will flow from that and it’s not just me that’s said it, the businesses themselves have said it,” he said yesterday.

“The laws of supply and ­demand haven’t been suspended and as we continue to see that strong growth in our labour market — remember last year, 403,000 (new) jobs — there’s never been a stronger year.’’

The Australian Bureau of Statistics yesterday said public sector pay rose 2.4 per cent nationally over 2017, compared with 1.9 per cent for private sector workers — the same as the increase in the consumer price index. Public sector pay rose faster than private in every state except South Australia.

The Victoria state Labor government’s December budget update revealed public sector wages, or employee expenses were 7.3 per cent higher than had been forecast six months earlier.

The update also showed the Andrews government’s wage bill was higher than the state’s total tax take of $21.2 billion.

Economists said wages growth in retail, struggling amid new online completion from Amazon and others, rose at 1.6 per cent — their weakest rate since the index began in 1998. Wage in the mining sector rose 1.4 per cent, slower than any other sector.

“It’s not time to break out the champagne and conclude that the era of very low wage growth is over, as there are a few reasons why wage growth will only edge up gradually,” said Paul Dales, chief economist at Capital Economics. “The long-term forces of globalisation and technological innovation that have restrained wage growth everywhere are unlikely to fade soon,” Mr Dales added.

Reserve Bank officials have ­recently suggested the unemployment rate will need to fall below 5 per cent from its current 5.5 per cent before any notable pick up in wage growth occurs. A recent UBS analysis showed a slump in the level of pay rises being inserted in new ­enterprise bargaining agreements to barely more than 2 per cent — a record low.

Separately, the IMF yesterday said wage growth in Australia was unlikely to exceed 2.5 per cent before 2021, a rate significantly below the government’s hopes.

“A 3.3 per cent increase in the statutory national minimum wage in mid-2017, which directly affects about 20 per cent of the employed and could indirectly affect another 5 per cent, has not yet had a discernible impact on aggregate wage statistics,” the IMF said in its update on Australia’s economy.

James Pearson, chief executive of the Australian Chamber of Commerce and Industry, said the “encouraging” wage increase could be the beginning of a long-awaited rise in wage growth after four years of stagnation. “Policy makers can support the trend by taking urgent action to reduce ­energy costs, cut taxes and ­implement other polices to help the country grow and remain competitive,” he said.