Why Australian Wage Growth is so Low

Australian workers’ wages are growing at the slowest rate in the history of the ABS survey.

According to the Australian Bureau of Statistics’ wage price index — a measure on salary and wage movements among Australian workers — wages increased by just 0.4% during the March quarter, leaving the annual rate of growth at 2.07% after seasonal adjustments.

Many reasons have been proffered for the slow rate of wages growth. But Tara M. Sinclair, chief economist at the world’s biggest jobs site, Indeed.com, said that it’s the shift to part-time employment under way in the Australian economy which is weighing on wages growth.

Sinclair said that Indeed’s data “shows there has been a 9 per cent increase in searches for part-time work over the past year as a share of all searches”.

“That suggests that for many job seekers, part-time work is a lifestyle choice,” she said.

While that’s a life choice, it’s also a reflection of changed circumstances in the jobs market.

Sinclair said when she “peels back” recent jobs data she sees an economy in transition. It’s an economic outlook where “whether we like it or not, digitisation and the so-called ‘sharing economy’ (typified by Uber and Airbnb) is changing the way we work, where we work and the type of work we are doing”.

That means employers, companies more broadly, are adjusting “their employment structures and hiring on a needs only basis, which, as the ABS data shows, is increasingly part-time”.

The convergence of preference by Australians and necessity from employers has kept wage rises down in Australia. Sinclair says:

The trend of replacing full-time employees with part-time workers has been going on for a while. That’s because workers are typically cheaper off the corporate payroll than on it, and this gives employers the ability to scale up or down according to their needs.

While there are some valid concerns about the quality of jobs being created, and whether it’s actually creating a large pool of underemployed Australians, evidence tends to suggest there is a growing preference for flexible, part-time work on the part of job seekers.

It’s clear that Australian workers and employers are both reacting to changed circumstances.

Source: http://www.businessinsider.com.au/heres-an-interesting-theory-for-why-australian-wage-growth-is-so-low-2016-5

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