Workers are missing out on surging post-pandemic profits.
The Seek Advertised Salary Index rose by just 0.2 per cent from December to January.
That amount was less than the previous month’s rise, making it the second consecutive period in which growth has slowed.
This could be a sign Australia might have already seen its salary growth peak, Seek senior economist Matt Cowgill said.
If that’s the case, then this does not bode well for workers because real wages had the biggest fall on record in 2022.
Wages increased by 3.3 per cent over the past year falling far behind inflation, which soared by 7.7 per cent.
Business profits soar
The link between business profits and wages has weakened, the policy director at the Australia Institute’s Centre for Future Work, Greg Jericho, said.
Centre for Future Work research found as of September, Australian businesses had increased prices by a total of $160 billion per year, over and above their higher expenses for labour, taxes and other inputs.
Meanwhile, workers lost a significant share of national income through the pandemic, including the outbreak of profit-led inflation in early 2021.
“Given the increase in service prices, you would have expected private sector wages to be significantly higher than they were, and it really does suggest that there has become a bit of a disconnect between prices and wages,” Mr Jericho said.
“What we’re seeing is not just the impact of the Reserve Bank slowing of the economy, but also the carry over of 20 years of industrial relations policy that is geared towards low wages growth.”
An industrial relations bill was passed in December in an effort to push up wages, with changes including easing the way for unions to negotiate multi-employer pay deals and getting rid of pay secrecy.
But it will take time for these changes to affect wages.
Real wages falling for in-demand workers
Even some of the industries seeing faster-than-average wage growth have issues.
Seek data shows the Trades and Services and Design and Architecture industries recorded the fastest growth in advertised salaries in the year to January.
But Mr Jericho said many of the roles in these industries offering higher wages may not be ongoing or permanent.
And although the advertised salaries for both industries rose by more than 6 per cent each in the year to January, the growth still fell behind inflation.
This is especially significant given these industries, particularly Trades and Services, are struggling to meet demand after the pandemic saw a surge in home builds and renovations.
Master Builders Association chief executive Denita Wawn told Seven the building and construction sector is facing an immediate workforce shortfall of up to 80,000 people – and could eventually reach the 450,000 mark.
The worker shortage is one of the key reasons Australians are waiting months to years for their homes to be built.
“What is surprising is that, even though … anyone who’s trying to get any renovations done or build a house knows that there is a real shortage of labour … you still are not seeing wages grow faster than inflation [in the construction sector],” Mr Jericho said.
“It just really highlights that even in the industries where there is such an overwhelming demand for labour, because of policies and interest rates in the past, so bad is the industrial relations system geared against workers that even those workers are unable to get a real wage increase.”
