Annual wages growth remains at record lows as recession takes toll

Workers received an average pay rise of 0.6 per cent in the final quarter of 2020 as annual wages growth remained at record lows.

The pay bump followed a rise of just 0.1 per cent in the September quarter and a 0.2 per cent increase in the June quarter.

Data released by the Australian Bureau of Statistics on Wednesday morning shows that over the 12 months to December 31 wages grew by just 1.4 per cent – the joint-worst result since records began in 1997.

The pandemic-induced recession led to hundreds of thousands of job losses and widespread pay cuts as coronavirus restrictions forced many businesses to close their doors.

But wages growth had been weak for many years leading up to the pandemic – tracking well below the long-run average of 3 to 4 per cent a year and discouraging consumers from opening their wallets as a result.

The weak wages outcome comes after the federal government announced on Wednesday that it would raise the base rate of JobSeeker by $25 a week after the temporary coronavirus supplement ends on March 31.

The changes amount to a reduction in benefits of $50 a week, as the current coronavirus supplement is worth $150 a fortnight.

Economists said the changes would add to the downward pressure on wages, while also making it harder for unemployed Australians to pay for household bills and essentials.

“Long term, it does two things,” Angela Jackson, lead economist at Equity Economics, told The New Daily on Tuesday.

“It reduces labour market mobility, because the risk of unemployment comes with this huge risk of poverty and this means people are less likely to take risks in the labour market. And it also entrenches disadvantage.”

More to come

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