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Economics
17 May 2024
Annual wages rose by 4.1 per cent in March quarter of 2024
The Wage Price Index rose by 4.1 per cent for the year in the March quarter of 2024, following 4.2 per cent in December. The WPI has consistently outpaced inflation over the past 12 months, signalling a return to real wages growth.
There was a notable increase in private sector wages this quarter, which ticked up 0.8 per cent over the quarter and 4.1 per cent for the year. In contrast, wages in the public sector rose 0.5 per cent over the quarter and 3.8 per cent for the year.
Individual arrangements played a significant role in the WPI quarterly growth in the March quarter of 2024, contributing over half of the total. This result is in contrast to the previous year, when the impact of enterprise agreements was more pronounced. The decrease in new enterprise bargaining agreements negotiated during this quarter likely contributed to this shift. Notably, the sectors with the most significant annual growth in wage rates were electricity, gas, water and waste services (4.4 per cent); retail trade (4.4 per cent); transport, postal and warehousing (4.3 per cent); and administrative and support services (4.3 per cent).
The Reserve Bank is more focused on private sector wage growth, as it is more sensitive to interest rates and has a more significant impact on inflation. With wage growth projected to stay above 4 per cent until the second half of the year, an improvement in productivity growth would be required to return inflation to the target of 2-3 per cent.
Unemployment inches upward to 4.1 per cent in April
Labour force statistics released in April show an uptick in unemployment from 3.9 per cent in March to 4.1 per cent in April, with the number of unemployed people up by 30,300.
The primary cause is more individuals waiting to commence new roles rather than a decline in available jobs. The number of employed people increased by 38,500 to 14.3 million. This rise in employment and unemployment saw the participation rate increase by 0.1 percentage points to 66.7 per cent in April.
These figures indicate that the labour market remains tight, with the participation rate close to its record high and employment reaching a peak level.
In April, around 45,000 people joined part-time employment, while full-time employment fell by 6,100, with the number of hours worked remaining constant.
With job vacancies remaining high, almost double their pre-COVID levels, employers are grappling with the urgent need to find people with the right skills to fill these unfilled positions. This situation underscores the importance of skill development and training in the current economic landscape.
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