Australian wage growth in 2023 beat out inflation, ABS reports
Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia, explains what’s behind the rise in wages and how they feed into inflation.
The Wage Price Index increased by 0.9% q/q in Q4. Public sector wage growth was very strong at 1.3% q/q. A larger-than-usual share of public sector jobs had a wage reset in Q4, and the average wage change was the highest on record in the public sector at 4.3%. Private sector wage growth was also brisk at 0.9% q/q. The average wage change came back down following exceptionally strong growth in Q3 due to the minimum and award wage decision. But it remains very high at 4.4%. Wages set by enterprise bargaining agreements made a strong contribution to headline growth in Q4. New EBAs implemented in Q4 showed strong wage growth reflecting indexation to strong CPI outcomes, some catch up to the large increase in minimum and award wages in Q3, and also reflecting the tightness in the labour market. The labour market is starting to slacken, which will ultimately weigh on wage growth. But there is a good deal of catch-up growth to come through the wage-setting system, and the labour market still remains in a tight position. We expect WPI growth will remain around this q/q pace of 0.8-0.9% through 2024.
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Sean Langcake
Head of Macroeconomic Forecasting, Oxford Economics
+61 (0) 2 8458 4236
Sean Langcake
Head of Macroeconomic Forecasting, Oxford Economics
Sydney, Australia