Real median wages fall most in decade

By Leith van Onselen

The latest quarterly wage price data, released last month by the ABS, revealed that Australian wages growth fell to the slowest pace on record (1997) in the March quarter, clocking it at only 2.6%, with real (inflation-adjusted) wages also falling for the second consecutive quarter to be down 0.1% in the year to March 2014 (see below charts).

Today, the ABS released median wages data, which recorded the first decline in five years and the biggest decline in a decade:

The median weekly earnings for employees in their main job was $950, at August 2013, according to the Australian Bureau of Statistics (ABS). This represents a 2 per cent decrease in real median earnings (CPI adjusted) over the year. This was the first year to year decrease since 2008…

Real (earnings adjusted by CPI) median weekly earnings in main job fell by 2.1% in the year to August 2013, the largest fall in a decade. Real mean weekly earnings were essentially unchanged (a fall of 0.2%). However, in the previous year (from August 2011 to August 2012), real median and real mean weekly earnings in main job each rose by 3.5%. Over the decade to August 2013, real median weekly earnings rose by 14% while real mean weekly earnings rose by 20%.

As noted this morning, real wages are likely to grow slowly as long as commodity prices and the terms-of-trade continue to decline, dragging down national disposable income.

Further, the unpleasant reality is that real wages will need to continue falling for Australia to regain its competitiveness (although labour costs are by no means the only factor). Without such an adjustment, trade-exposed local firms could continue to shutter, lowering employment.

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