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Chief economist update: Australian wages slow but still grow

While many have seen their wages stagnate, or even drop, this year the latest figures from the Australian Bureau Statistics (ABS) shows wages are up slightly from last year.

"The September quarter is generally a quarter of solid wage growth, however, the impacts of the COVID-19 pandemic contributed to a subdued rate of wage growth in September quarter 2020," ABS head of price statistics Andrew Tomadini said.

"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.

"Additionally, the staggered implementation schedule of the Fair Work Commission annual wage review moved some regular September quarter wage rises to later quarters."

This comes as no surprise to most blokes and sheilas who have seen a lower dollar figures on their pay slips over the past quarter, but generally - and as the ABS wage price index report shows - our pay packets have still grown from a year ago. It's only the rate of growth in wages that has slowed.

Total wages "growth" slowed to 1.4% in the year to the September 2020 quarter from 1.8% in the previous one. Annual private sector wages growth slowed to 1.2% from 1.7%. Public sector wages slowed to 1.8% from 2.1%.

The Morrison government's Jobkeeper scheme has short-circuited the lagged negative correlation between wages growth and the underemployment rate. We would have seen negative wages growth otherwise.

Continued, albeit slowing growth in wages means that consumers still have money to spend and with the recovery in consumer sentiment, spend they will.

The latest Westpac-Melbourne Institute Consumer Sentiment survey showed confidence rising by 2.5% to a reading of 107.7 points in November from 105.0 in the previous month and sharply above the 75.6 reading recorded in April 2020 (the lowest in the survey's 47-year history).

However, the bullish headline consumer sentiment figure is tempered by the survey's Unemployment Expectations Index which increased to a reading of 132.0 in November from 122.2 in the previous month - indicating that more respondents expect higher unemployment.

Consumers expecting job losses would go slow on shopping and save before slow wages growth become nil wages.

Read our full COVID-19 news coverage and analysis here.

Read more: ABSAndrew TomadiniJobkeeperScott Morrison
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