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Sluggish wage growth tipped to continue in 2020
Slow employment growth, rising unemployment and low wage growth will be the three main issues facing future economic discussion, new research has suggested.
Sluggish wage growth tipped to continue in 2020
Slow employment growth, rising unemployment and low wage growth will be the three main issues facing future economic discussion, new research has suggested.
According to research by Indeed, calls are getting louder for programs that promote economic growth and boost employment.
Deputy governor Guy Debelle recently noted, “Employment growth has also been faster than the working-age population has been growing. As a result, the share of the Australian population employed is around its all-time high, which is a good outcome.”
“Normally, we would have expected this strong employment growth to lead to a decline in the unemployment rate. But the unemployment rate has turned out to be very close to what we had expected and has moved sideways around 5¼ per cent for some time now,” Mr Debelle added.
Statistics by Indeed showed that employment has increased an average of 22,000 people per month in 2019, which is down from 23,600 in 2018 and 34,200 in 2017.
The 2019 rate translates to employment growth of 2.1 per cent, which has resulted in the unemployment rate increasing to 5.2 per cent.
Indeed noted that Australian wage growth will continue to be sluggish, with only one Australian sector, healthcare and social assistance, to have strong growth relative to what was once considered normal.
Over the year to the September quarter, wages in the sector rose 3.2 per cent, above its 3.0 per cent average over the past decade.
A few other sectors, such as professional services, are experiencing much stronger wage growth than they were a year ago, inching closer to their historical averages. Unfortunately, a number of sectors are experiencing pay gains below 2 per cent.
Blaming lower wage growth on high supply, Mr Debelle said: “The surprising strength in labour supply has been one of the factors that has contributed to wages growth being slower than we had expected.”
Overall, the trends that have defined the labour market in 2019 are tipped to persist in 2020, according to Indeed.
Youth unemployment will remain an issue, wages will again disappoint, and job gains will be concentrated in the service sector, Indeed concluded.
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