Lowest wage growth recorded as pandemic slashes business activity

Australian wages slumped to a new low in the June quarter when COVID-19 triggered nationwide restrictions and slashed business activity.

Australian wages rose at the lowest annual rate ever recorded last financial year in both the private and public sectors, with business activity almost grinding to a halt in the final quarter as the COVID-19 pandemic took hold.

According to the latest Wage Price Index, which measures the change in hourly rates of pay and salaries, the seasonally adjusted price of labour only inched 0.2 per cent higher in the June quarter.

It was when the global health crisis was declared and nationwide restrictions peaked, slashing business activity.

It was the lowest quarterly rise since the report began in 1997.

“The June 2020 quarter rise was mainly in the public sector (0.6 per cent),” Australian Bureau of Statistics head of price statistics Andrew Tomadini said on Monday.

“Private sector wage growth eased to 0.1 per cent as businesses adjusted to changes in the Australian economy.”

The construction sector had the lowest annual wages growth of 0.8 per cent. Picture: Richard Dobson

Over the 2019-20 financial year, seasonally adjusted wages increased by 1.8 per cent, dipping below the previous lowest annual rate of growth of 1.9 per cent.

“After a steady period of wage growth over the previous 12 months, wages recorded the lowest annual growth in the 22-year history of the WPI,” Mr Tomadini said.

Wages lifted for jobs with scheduled increases – enterprise agreement and award-based roles – but were offset by falls for more informal agreements.

South Australia and Tasmania recorded the highest annual growth of 2.4 per cent, and for the eighth quarter in a row, Western Australia recorded the lowest wages growth at just 1.6 per cent.

The main industry contributing to wage growth was education and training, while lower construction activity left the building sector among the highest proportions of wage reductions.