November 22, 2022
In September quarter 2022 the seasonally adjusted WPI:
- Rose 1.0% this quarter and 3.1% over the year.
- The private sector rose 1.2% and the public sector rose 0.6%.
Private sector drives WPI increases
An increase in the average size of hourly wage rises in the private sector was the main driver of wages growth over the quarter.
Seasonally adjusted private sector wages rose 1.2% over the September quarter 2022, the highest quarterly rate of wages growth since September quarter 2010. Through the year growth lifted to 3.4%, the highest annual rate since December quarter 2012.
Through the year growth in public sector wages was the same this quarter as it was last quarter, and similar to rates recorded before the pandemic (2.4%).
Jobs paid under individual arrangements strongest contributor to wages growth
The contribution by different methods of setting pay, shows jobs covered by individual arrangements drove a significant proportion of September quarter 2022 growth. Many of these jobs are market sensitive and tend to react more quickly to labour market conditions. Some individual arrangement jobs have also been directly influenced by the Fair Work Commission Annual Wage Review with increases benchmarked against the size and timing of this decision.
This year the Fair Work Commission Annual Wage Review decision issued increases for award wages of between 4.6% and 5.2%. The increases in award wages are scheduled to be paid in two stages, with the majority of award-based rises paid in the September quarter 2022.
Fair Work Commission Annual Wage Review 2021-22 influences wages growth this quarter
In the Annual Wage Review 2021-22 decision, the Fair Work Commission determined a $40.00 per week increase (equivalent to between 4.6% and 5.2% wage increase).
The decision directly determined the size of increases to jobs paid under modern awards, with the majority of these jobs receiving a 4.6% increase. It was a significant contributor to hourly wage rate increases in the Retail trade, Administrative and support services, Accommodation and food services, Public administration and safety and Health care and social assistance industries.
Sector wage growth
Private sector
The average size of hourly wage rises for private sector jobs recording a wage movement increased to 4.3 per cent, up from 2.9 per cent the same time last year.
Compared to last year, a higher proportion of private sector jobs recorded a wage movement. This was driven by jobs covered by individual arrangement that recorded larger rises as businesses paid increases based on end of financial year wage and salary reviews or interim increases as a retention strategy.
Focusing on private sector jobs that received wage rises this quarter, the time since last pay change indicates more than a third of these jobs (36%) had received a pay rise less than 12 months ago and a further 52% received a rise this time last year. Only 12% of jobs that received pay rises this quarter received their last pay rise more than 12 months ago, a figure similar to pre-pandemic September quarters.
Public sector
The average size of hourly wage rises for public sector jobs that recorded a wage movement was 2.3 per cent, similar to the average size recorded before the pandemic. The proportion of jobs that received a wage movement (30%), was also similar to pre-pandemic levels.
Focusing on public sector jobs that received wage rises this quarter, the time since last pay change indicates nearly half of these jobs (45%) had received a pay rise less than 12 months ago and a further 32% received a rise this time last year. Only 23% of jobs that received pay rises this quarter received their last pay rise more than 12 months ago, a figure much smaller than in September quarter 2021 (56%).
Occupation wage growth
This quarter saw a broader range of occupations in the private sector recording higher average hourly rises. At the same time last year, the demand for labour was mainly centred across Manager and Professional roles. Wage pressure observed in the WPI since December quarter 2021 has expanded across roles resulting in businesses paying increasingly higher market rates for skilled jobs.
The first stage of the scheduled award rise in September quarter 2022 mostly influenced the wage rises in Community and Personal Service, Sales, and Labourer roles.
Industry wage growth
Original estimates:
- Jobs in the Health care and social assistance (1.5%) and Professional, scientific and technical services (1.7%) industries were the main contributors to growth reflecting both the size of these industries and the size of the wage increases.
- The Retail trade industry recorded the highest quarterly and annual growth at 2.4% and 4.2%, respectively. Industry growth was mainly driven by the size and timing of award rises, the higher annual rate of growth reflecting two award increases paid to jobs within the last year.
- The Education and training industry recorded the lowest quarterly (0.8%) and annual (2.2%) growth across all industries.
Source: Australian Bureau of Statistics
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