That lighter feeling in your pocket isn’t your imagination, wage rises are at the slowest pace in 17 years.
Total hourly rates of pay, excluding bonuses, rose by 2.5 per cent in 2014, the slowest pace since the Australian Bureau of Statistics started the survey in 1998.
The slowdown comes after wages gained by only 0.6 per cent in every quarter in 2014 and as the unemployment rate stayed above six per cent in the second half of the year.
Describing that pace as “glacial”, JP Morgan economist Tom Kennedy expects it to stay slow as long as the unemployment rate refuses to fall significantly from its 12-year high.
“The glory days of mining wages growth are well and truly over,” he said.
“Given wage growth typically tracks turning points in the unemployment rate by a few quarters, wage pressure should remain benign for some time yet.”
Mr Kennedy said that if high wages growth sectors, such as information, telecommunications and financial services, were excluded then the rise is half what it was during the height of the mining boom in 2011.
Randstad employment market analyst Steve Shepherd said high unemployment and uncertainty around Australia’s economic future had stunted wage growth.
“Employers are finding themselves in a buyers market. Wages will remain flat until we see an increase in demand for skilled workers or if employers look to plug a skills gap,” he said.
“Less than half of Aussie workers expect the economic situation to improve in 2015.”
Mr Shepherd expects construction industry workers will be the first to see wage rises pick up pace.
“We have been seeing jobs growth in this sector, which is backed up by the latest Master Builders of Australia survey indicating hiring expectations are at their highest level in seven years,” he said.
Commonwealth Bank senior economist Michael Workman said the good news is that slow wage rises opens the door for more Reserve Bank of Australia rate cuts.
“The upward trend in the unemployment rate is a significant issue for the RBA against a background where upside inflation risks are minimal,” he said.
“We expect another RBA rate cut soon, most probably at next week’s March meeting.”