Wage Growth Australia – Australia’s Wage Growth Problem: What’s Going On?

Wage growth remains lackluster in Australia, sitting at a 20 year low according to new ABS figures out this week.

What the numbers reveal, is a measly 0.5% growth for the June quarter, and 1.9% for the year. As you’d expect, this is placing increasing pressure on household budgets – wages are simply not holding up with cost of living increases.

A contributing factor for low wage growth, according to the ABS’s chief economist Bruce Hockman, is underemployment: there’s surplus capacity in the labour market which is key to keeping wage growth down.

The Treasurer, Scott Morrison, keeps telling us to look ahead, as things ‘will get better’, signalling record jobs growth as the benchmark. However, the facts remain: the flat wage growth (under the 2.5% the government budgeted for the year to June in the 2016 budget), the increase in part-time hiring – ‘insecure work’ as Labor calls it – has well & truly hit.

There’s other contributing factors outside of underemployment, according to NAB:

  1. Global growth has been low
  2. There’s a lingering aftermath of the GFC: employers had the upper hand back then, leading to fewer jobs and greater underemployment, a status quo that’s held
  3. Technology & automation is starting to have impact: we’ve talked about AI and the impact of the raft of new technologies seemingly equipped to replace some job families
  4. And in relation to technology grassroots talent coming into the market, are technology enabled, cheap, available
  5. China’s impact on global labour supply, has kept wages down
  6. The perceived gains in productivity from social media, even email, have often had the opposite effect
  7. The ageing population: older workers have lost their bargaining power (and are less technologically savvy – see point 3 above)

Here’s some of the ABS data:



























One bright note was the Fair Work Ombudsman’s decision to raise not just the national minimum wage but the entire structure of award wages, by 3.3% (compared with a rise of 2.4% last year).

And this: there been growth in full-time jobs creation over the past six months – unemployment is down. This is providing some confidence for the federal government that wages will pick up, and spending will start to rebound.

Here at CXC Australia, some of the signs supporting these conditions are telling:

  • we’re seeing engagements of contingent workers, shortening (in tenure) – this began in April 2016
  • in general, the mix of roles and clients with whom we work have seen an average pay decline post the mining boom
  • as a result, we expect to see an increase in the use of third party providers for casual and award worker engagements

What’s the scenario like in your business? Let us know in the comments below and contact us now!