Tight jobs market underpins 3.7 per cent wages growth

Wages have responded to the tight labour market, rising 3.7 per cent annually in the March quarter.

On a quarterly basis, the Australian Bureau of Statisticsā€™ wage price index lifted 0.8 per cent.

ABS acting head of prices statistic Leigh Merrington said annual wage growth was at its highest level since September quarter 2012 due to low unemployment, a tight labour market and high inflation.

Mr Merrington said the private sector was the main driver of growth, with private sector wages as measured by the index lifting 0.8 per cent across the March quarter and 3.8 per cent annually.

ā€œA number of private sector industries have recorded annual wages growth above four per cent, with the remaining industries all above three per cent annual growth,ā€ he said.

But the public sector wages recorded their highest annual and quarterly growth in a decade, lifting three per cent across the year to March and 0.9 per cent on a quarterly basis.

Analysts were expecting 0.9 per cent quarterly wage growth and for the index to be up 3.6 per cent on the year thanks to pressure in the labour market.

The index lifted 3.4 per cent annually in the December quarter.

The bureau also noted more jobs were seeing larger pay rises between four and six per cent and fewer were hit with rising wages of two per cent or less.

The pace of wage growth is watched carefully by the Reserve Bank, with too much pressure from worker pay rises a marker of persistent inflation.

The RBA is comfortable with wage growth between 3.5 and four per cent as it seeks to return inflation to target by mid-2025 while keeping most people employed.

For workers, wage increases have been welcome but salary boosts have been outpaced by fast-rising consumer prices.

Inflation has likely passed its peak but at seven per cent annual growth in the March quarter, households are still under pressure from high living costs.

Australiaā€™s lowest-paid workers are likely in line for a pay boost as the Fair Work Commission gears up for its annual minimum and award wage review.

As part of a consultation meeting with government, union and employer groups on Wednesday, Department of Employment and Workplace Relations official Greg Manning outlined the reasoning behind the governmentā€™s support of a pay rise that would ensure the real wages of the lowest paid workers ā€œdo not go backwardsā€.

ā€œPersistent declines in real wages for low paid workers would have a significant impact on their living standards, resulting in those low paid workers shouldering a disproportionate burden of the macro economic adjustment needed to lower inflation,ā€ Mr Manning said in an opening statement.

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Poppy Johnston
(Australian Associated Press)

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