Tight budgets stall public sector wages
BY: DAVID UREN, ECONOMICS CORRESPONDENT From: The Australian November 17, 2011
http://www.theaustralian.com.au/business/economics/tight-budgets-stall-public...
WAGES growth in the public sector has slowed to its lowest level in more than a decade, as governments wrestle to gain control over their budgets.
Wage inflation is also slowing in the private sector, and confirms the anecdotal evidence that business has given to the Reserve Bank that excessive wage growth is not a problem, with few firms suffering from labour shortages.
The 0.8 per cent rise in wages across the economy in the September quarter was the lowest rise in almost two years. Wages rose by 0.5 per cent in the public sector and 0.9 per cent in the private sector in the quarter.
A bigger increase had been expected because the 3.3 per cent minimum wage rise that affects about 1.4 million workers took effect in the month.
While the Australian Bureau of Statistics tries to adjust for this, the labour price index still points to moderating wage growth.
RBS senior economist Felicity Emmett noted that the annual rate of wage growth, which is now at 3.7 per cent, is still higher than the low of 2.9 per cent reached during the global financial crisis, but is well below the pre-crisis peak of 4.3 per cent.
The moderation in wage pressure is evident nationwide with Western Australia, where wages grew by 4.0 per cent in the past year, the only standout.
In further evidence of the slowing in the labour force, the Department of Workplace Relations said yesterday the number of job vacancies fell last month by 1.9 per cent. The reduced wage growth will not only save the commonwealth money on its public service, but will also cap the rise in age and disability pension costs, which are indexed to the higher of male wages and pensioner cost of living.
In further good news for the commonwealth budget, the iron ore price is staging a recovery, rising from the low of $US116 a tonne hit two weeks ago to reach $US146 yesterday.
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