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Three-year-old deal keeps wages growing as private sector workers struggle

Without the impact of that deal, overall wages growth would likely have slowed, especially with a small drop for the private sector which accounts for almost 85 per cent of the workforce.

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Wages across the private sector rose by 0.5 per cent in the quarter but annual growth slipped to 2.3 per cent.

The Victorian wage deal ensured workers across the health care sector continue to receive the best pay rises in the country, up by 3.2 per cent over the past year. But it’s a tougher story for those in wholesale trade with wages there edging up by 1.7 per cent.

Wages are growing fastest in Victoria, up by 2.9 per cent over the past year while they remain slowest in WA at 1.6 per cent where they have been for the past three consecutive quarters.

Asia-Pacific economist for job site Indeed, Callam Pickering, said the figures pointed to the problem facing the RBA and government which need a tighter jobs market to help drive up wages.

“With the unemployment rate at 5.2 per cent and underutilisation rate at 13.5 per cent, there is still a huge amount of slack across the labour market,” he said.

“The underutilisation rate needs to ease towards 12 per cent before wage growth of 3 per cent or higher is likely. That won’t happen overnight nor is it likely within the next year.”

Sarah Hunter, head of Australia macroeconomics at BIS Oxford Economics, says new wage data increases chances of lower interest rates.

Sarah Hunter, head of Australia macroeconomics at BIS Oxford Economics, says new wage data increases chances of lower interest rates.Credit:Christopher Pearce

BIS Oxford Economics chief economist Sarah Hunter said the figures confirmed the economy needed to grow faster to bring more people into the workforce and were further evidence that official interest rates needed to be lower.

“Given this, we still expect the board to cut the cash rate again this year, to 0.75 per cent, and possibly one more time in early 2020.”

The data came as Westpac’s measure of consumer sentiment showed a surprising lift in August, up 3.6 per cent after a combined 4.7 per cent fall through June and July.

Westpac chief economist Bill Evans said given the survey was carried out as share markets fell and the Australian dollar dropped, the overall result was surprising.

He said while confidence had fallen in the wake of the RBA’s recent cuts to official interest rates, there may be a lift in sentiment with expectations of further rate reductions.

“Indeed part of the gain is consistent with firming expectations for additional interest rate cuts,” he said.

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