Most workers are likely to keep their jobs despite the economy sinking into a stretch of slowing growth.
Like most advanced economies, the pandemic recovery has fuelled exceptional competitiveness in the jobs market.
Treasury analysis of jobs data shows 333,000 more Australians were employed in April 2023 compared to when Labor took office in May 2022.
It was the second-highest increase on record.
“Jobs growth is faster than the major advanced economies and we’re seeing the beginnings of welcome wages growth,” Treasurer Jim Chalmers said while promoting the government’s economic record after one year in office.
HSBC chief economist Paul Bloxham said the pick up in wages growth was “comparatively tame” given the state of the jobs market.
Wages were up 3.75 per cent in the 12 months to March, up from the normal pre-pandemic level of around two per cent.
“The pick up has lifted wages growth from rates that are below what is consistent with the RBA’s two-three per cent inflation target, to the three to four per cent rates that are typically in line with it,” Mr Bloxham wrote in a report.
This assumes productivity growth stays around its pre-pandemic average of one per cent year on year.
He said the lack of churn in the jobs market was likely holding back wages, with workers typically cinching higher pay when they change jobs.
“Tame wages growth may reflect that job market churn is still fairly low, despite rising a bit – worker’s wages rise more when they change jobs,” Mr Bloxham said.
On the plus side, the subdued wage growth would keep pressure off the Reserve Bank to keep hiking interest rates and prompt unemployment to rise to bring inflation back to target.
Australia has also enjoyed record-high female employment, with an extra 21,400 women employed full-time in April and almost 224,000 more since a year ago.
Female unemployment dropped to 3.3 per cent, the lowest since 1973.
“This government is all about building an economy that delivers more opportunities for more people in more parts of our country and central to that is creating more secure, well-paid jobs,” Dr Chalmers said.
The coalition opposition was dismissive of Labor’s back-slapping, saying the results were based on strong economic circumstances left by the outgoing Morrison government.
Nationals leader David Littleproud says increased welfare payments in the budget on top of extra spending risked adding pressure to inflation.
“We’re saying it’s tough for those on welfare, but let’s get you back into the workforce,” he told the ABC.
“Let’s pull the policy levers that bring down your energy prices without having to spend Australian taxpayers’ money.”
Mr Littleproud also called on the government to bind large supermarkets to a mandatory code of conduct as they reported big profits on the back of higher shelf prices.
“What’s happening is our good friends at the supermarket, as usual, are sitting there profiteering off the good old Australian farmer,” he said.
Penalties needed to be increased from $64,000 to $10 million.
“Bring in big stick legislation, divestiture powers where if they do farmers over and it’s not a transparent price, then you lose a Dan Murphy’s,” Mr Littleproud said.
Dominic Giannini and Poppy Johnston
(Australian Associated Press)