Average weekly ordinary time earnings rose by 1.1 per cent in the March quarter with private sector wages up 1.2 per cent and public sector wages up 1.0 per cent.
- Highest and lowest wages: The average wage stands at $69,992. The highest average wage can be found in the Mining sector, at $117,905 per year. The lowest average wage is obtained by workers in the Accommodation and Food Services sector ($49,712), followed by retail trade ($50,450).
- Falling wages: Wages in the Administrative and Support Services sector fell by almost 1.1 per cent over the past year. Wages in rental, hiring & real estate also fell by 1.1 per cent over the past year. But in the Wholesale trade sector, wages soared by almost 12.7 per cent, while mining sector wages rose by 8.0 per cent over the past year.
- Wages by states & territories: Across states & territories, we have calculated average annual wages were highest in: ACT ($80,766) from Western Australia ($78,744), Northern Territory ($71,942), NSW ($69,592); Queensland ($69,186); Victoria ($68,219), South Australia ($63,471) and Tasmania ($61,532).
What does it all mean?
- The best measure of wage growth is the wage cost index which came out yesterday. And that data showed wage growth remains subdued in the private sector. The average weekly earnings data is affected by compositional changes, such as the shift from full-time to part-time and movements across sectors. But the average weekly earnings data provides useful dollar estimates for wages.
- And there are clearly some major differences across the country when it comes to wages. Western Australia continues to dominate as the high wage state, but coming up quickly is the Northern territory, with the average wage now higher than even NSW, Queensland and Victoria. Male wages continue to outpace female earnings. And the gap between high and low wage industries continues to widen.
- The gap between male and female earnings shows no signs of closing. On average men are earning $13,031 more per year than women. One key reason for the disparity is the rising demand for labour in male dominated sectors, such as mining and construction. Still there remains worrying wage disparities in other sectors as well that is clearly worthy of greater investigation.
- The latest data on wages bears out what most households would be well versed with now – the Chinese industrialisation is leading to major shifts in our economy. Wages in the fast-growing mining sector are now more than double the earnings in food sectors like cafes and restaurants as well as across the retail sector. And the resources states of Western Australia, Northern Territory and Queensland are now starting to dominate in the pay stakes.
- Interestingly despite sustained growth in real wages Aussie consumers are remaining ultra-conservative and the trend is unlikely to change anytime soon. Interestingly the growth in full time earning including bonuses and overtime was also relatively well contained at 4.4 per cent. Given the higher cost of living expenses, clearly some sectors and households would be relying on overtime and bonuses to support the household spending.
- Wage growth will be closely watched by the Reserve Bank over the coming year. At present, wage growth across the economy does seem in balance however if activity levels pick up over the next year, as the central bank anticipates, the labour market does have the potential to tighten up. Excessive wage pressure is exactly what the Reserve Bank is attempting to curtail and the Federal Government will need to play a key role – implementing measures to improve Australia’s productivity and ensuring that skilled migration targets are constantly reviewed and revised.
What do the figures show?
Average weekly earnings
- Average weekly ordinary time earnings rose by 1.1 per cent in the March quarter to be 4.4 per cent higher than a year ago. Private sector wages rose by 1.2 per cent in the quarter and by 4.6 per cent over the year. Public sector wages rose by 1.0 per cent in the quarter and by 4.0 per cent over the year.
- Average weekly total earnings rose at a faster 1.5 per cent in the quarter and by 4.4 per cent over the year.
- Male wages rose by 1.2 per cent in the quarter and by 4.3 per cent over the year. Female wages rose by 1.2 per cent in the quarter and by 5.0 per cent over the year.
- Wages rose most over the year in Wholesale trade (up 12.7 per cent), Mining (up 8.0 per cent) and Professional, scientific and technical services (up 7.5 per cent). Wages were weakest over the past year in both Administrative & support services and Rental, hiring & real estate services (down 1.1 per cent), followed by Health care & social assistance (up 1.1 per cent).
- Across states & territories, we have calculated average annual wages as follows: NSW $69,592 (up 2.0 per cent over the year), Victoria $68,219 (up 6.1 per cent), Queensland $69,186 (up 5.5 per cent), South Australia $63,471 (up 4.1 per cent), Western Australia $78,744 (up 4.0 per cent), Tasmania $61,532 (up 4.0 per cent), Northern Territory $71,942 (up 7.8 per cent) and ACT $80,766 (up 4.9 per cent).
- The highest average wage can still be found in the mining sector, at $117,905 per year. Next highest is scientific & technical services ($86,024), finance & insurance services ($82,508) and information media & telecommunications ($82,150). The lowest average wage is obtained by workers in the accommodation and food services sector ($49,712), followed by retail trade ($50,450) and “other services” ($54,906).
What is the importance of the economic data?
- The ABS publishes the Average Weekly Earnings (AWE) series on a quarterly basis. While the Wage Cost Index allows analysis of wage movements from quarter-to-quarter, the AWE series is best seen as a measure of actual dollar figures for wages. But average weekly earnings figures can be distorted by changes such as the relative growth of high-paid to low-paid jobs and the cashing out of bonuses in ordinary earnings.
What are the implications for interest rates and investors?
- Over the coming year it is clear that Australia will be riding on the back of the mining sector. But the non-mining states are unlikely to feel the effects of the rise in incomes until the recovery is well and truly in full swing. No doubt as the recovery gains traction the mining states will be in the driver’s seat and continue to enjoy strong investment flows.
- The low inflation environment ensures that the Reserve Bank can look at further rate cuts in coming months. CommSec expects the Reserve Bank to reduce the official cash rate by a quarter of a per cent at the August meeting. However the risks are that the central bank moves earlier given the uncertainty surrounding Europe.