Australian wages rise as economy continues to recover from the coronavirus pandemic


Australian wages have surprisingly edged higher as a result of the nation’s swift recovery from the economic downturn sparked by the coronavirus pandemic.

Latest wage price index figures from the Australian Bureau of Statistics reveal pay packets rose 0.6 per cent in the December quarter of last year, with the uplift largely due to salary cuts that were implemented as a cost-saving measure during the height of the lockdown being scrapped.

In annual terms, wages over the year rose 1.4 per cent, with the biggest rises in the private sector.

ABS head of price statistics Michelle Marquardt said private sector wages rose 0.5 per cent, while the public sector grew 0.3 per cent.

“December quarter’s moderate growth was influenced by businesses rolling back short-term wage reductions, returning wages to pre-COVID levels,” Ms Marquardt said.

“The phased implementation of the Fair Work Commission annual wage review also had a small positive impact on wages.”

Victoria recorded the largest lift in wages, with professional scientific and technical services industries faring best.

Economists predicted an overall wage index increase of roughly 0.3 per cent for the December quarter.

CommSec chief economist Craig James said the fastest level of wage growth in 18 months came as a surprise and indicated more “normal” economic conditions.

“When you consider the amount of spare capacity in the jobs market, the latest wage data is encouraging,” Mr James said.

“The Bureau of Statistics puts much of the gain in private sector wages to employers adjusting hourly earnings back to pre-pandemic levels. So the wage data is yet another sign of the economy gradually getting back to normal.”

ANZ economist Catherine Birch said the pandemic had pushed a great deal of volatility into wage data, flagging there is likely to be some drag on wage growth into 2021.

“The minimum wage increase will flow through to workers in the industries hardest hit by the pandemic, such as tourism and hospitality, from February 1, 2021, which will put some upward pressure on first-quarter wage growth. But there will still be some drags on the recovery,” she said.

The Reserve Bank of Australia expects real-time wage growth will remain stagnant for several years while inflation falls outside its target range of 2 to 3 per cent.



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