The ABS was right to identify the extraordinary nature of the December quarter wages data in the title of its media release, “2015 ends with lowest wage growth on record.” This applies at both the national level and in Queensland (see chart above). Wages growth at around 2% per annum is broadly in line with CPI inflation, so wage and salary earners have not really made any gains over the last year. The weak wages growth raises further doubt about the State Government’s misplaced optimism in the strength of the State economy based on the ABS jobs growth estimates. I agree with CommSec economist Savanth Sebastian, who is quoted in the Courier-Mail this morning as saying:
…poor economic indicators in the Sunshine State were caused by the collapse in infrastructure development.
Indeed, I said much the same thing last week in comments that were quoted in last Friday’s Courier-Mail:
Recent quotes from QEW in Qld Parliament and the Courier-Mail
There is plenty of underemployed labour at the moment, so I’m not surprised that we are seeing jobs growth but no growth in the price of labour.
I suspect real wages growth rates (slightly above 0%) are probably still outstripping labour productivity growth rates.
My bet is that we are now entering a protracted period of effectively no, or slightly negative, growth in real labour prices. There simply isn’t anything to drive them up.
Yes, that could be what is going on. Thanks for the comment, Jim.