Australian wages growth has again remained subdued as per the latest data released by Australian Bureau of Statistics (ABS). Wages growth have been at record low levels for an entire year by the end of June quarter and this seems to be weighing upon the consumer spending and the already deteriorating inflation scenario. Wage price index (WPI) is marginally up (0.5%) in April-June compared with an upwardly revised 0.6% in the previous quarter. Annual wage growth was also at its lowest (at 1.9%). The WPI (seasonally adjusted) has recorded quarterly wages growth in the range of 0.4 to 0.6% for the last 12 quarters (from September quarter 2014). Importantly, this low wage growth reflects ongoing spare capacity in the labour market. Further, underemployment is an indicator of labour market spare capacity and a key contributor to ongoing low wages growth. Private sector wages rose 1.8% and public-sector wages grew 2.4% through the year to June quarter 2017. The year wage growth to the June quarter 2017 ranged from 1.1% for the Mining industry to 2.6% for Health care and social assistance industries. Western Australia recorded the lowest through the year wage growth of 1.4% and South Australia and Northern Territory reported the highest of 2.1%. 

June quarter key data; (Source: Australian Bureau of Statistics)
 
In the Private sector, Mining recorded the highest quarterly rise of 0.8%, and Western Australia was the main driver of wage growth in the Mining industry in June quarter 2017, with some employees receiving their first wage increases in several years. Public administration and safety recorded the lowest growth over the quarter. Rises through the year in the private sector ranged from 1.1% for Mining to 2.3% for Health care and social assistance. In the public sector, Electricity, gas, water and waste recorded the highest quarterly rise of 0.8%. Professional, scientific & technical services, public administration & safety and education & training recorded the lowest quarterly wages growth of 0.2%. Rises through the year in the public sector ranged from 1.6% for professional, scientific and technical services to 2.8% for Health care and social assistance.
 

Quarterly changes; Trend and Total hourly rates of pay excluding bonuses (Source: Australian Bureau of Statistics)

Overall, this snail’s pace movement in wages growth has led to an unwelcome dip in underlying inflation, which is below the Reserve Bank of Australia's (RBA) target band of 2-3%. The RBA is slightly worried about the impact on the A$1.7 trillion ($1.3 trillion) economy from surging household debt, which is already at 190% of disposable income. On the other hand, it is still expected that wages growth will eventually improve at the back of latest stimulus in employment and improved scenario for the mining investment.

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