AUS
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Summary
- The Wage Price Index rose 0.6% in the March quarter 2021 with the annual growth rate at 1.5%.
- The wage growth was driven by regularly scheduled increases amid improved business conditions.
- The public sector recorded its lowest annual growth of 1.5%, while private sector remained steady at 1.4% for the second quarter in a row.
The Australian Wage Price Index, a key indicator to gauge overall health of an economy, grew at a subdued rate in the first three months of the year, even as unemployment rate fell faster than expected.
In the January-March quarter of 2021, the Australian wages rose 0.6%, slightly higher than estimates for 0.5% rise, as per the data released by the Australian Bureau of Statistics on Wednesday.
The index, which measures the change in hourly wages and salaries paid, registered an annual growth rate of 1.5%, above the record low pace of 1.4% in the December quarter of 2020, the data showed.
The tepid growth in pay increase is a matter of concern for the Reserve Bank of Australia (RBA) as it is a prerequisite to achieve sustained consumer price growth to maintain accommodative stance for a longer term.
The RBA in its policy meeting on May 4 had maintained that the cash rate wouldn’t rise until inflation was sustaining between 2-3%. To meet the RBA’s inflation target, wage growth needs to rise above 3%.
Public sector pay hike freezes
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The public sector registered its lowest annual growth of 1.5% since the commencement of the series, as wage increase deferrals and smaller hike impacted overall growth. Annual growth in private sector remained steady at 1.4% for the second quarter in a row following a September-quarter 2020 low.
On quarterly basis, the private sector wages grew by 0.6%, while those in the public sector rose by just 0.4%.
Education and Training Record The Highest Annual Rise of 2.2%
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Industry wise, education and training recorded the highest annual rise of 2.2%, while all other industries posted lower annual wage growth than the year before.
On the quarter-on-quarter basis, accommodation and food services recorded the highest quarterly rise of 1.2%. Electricity, gas, water and waste services, rental, hiring, real estate services and Arts and recreation services registered the lowest quarterly growth of 0.1%.
Tasmania Reports The Highest Growth Across State
Tasmania recorded the highest quarterly rise of 0.8%, with wage growth mainly driven by the public sector contributing to the highest annual wage increase of 2% across states and territories.
Meanwhile, Queensland, Western Australia and the Australian Capital Territory recorded the lowest quarterly wage index rise of 0.4%.
The Australian Capital Territory posted the lowest annual growth of 1.3%. All states and territories recorded lower annual wage growth as compared to the March quarter 2020.
