Why unemployment figure is bad news for getting a pay rise

THEY are official figures which bring promising news for thousands of Australians who have just been hired but dismal prospects for millions who have held down jobs for years.

Unemployment has refused to budge and that means the chances of solid wage rises have gone down.

The unemployment rate in April was stuck at 5.6 per cent, the Australian Bureau of Statistics reported today.

That involved 14,000 extra jobs created - 8000 full-time and 6000 part-time - and a lot more people wanting to join the workforce - a rise in the participation rate to 65.7 per cent, the highest level since 1978.

That means jobs are being created but the competition to fill vacancies is intensifying.

So if you already have a job and are holding out for a wage increase these figures show you will be waiting a lot longer.

One reason pay rates are moving sluggishly is that there are many more people wanting work, particularly full-time jobs, than positions available. That means employers have greater control of pay levels.

The ABS today said the figures "continued the recent slowing of employment growth, particularly full-time employment growth".

"It's important to remember how much change there is in the labour market every month beneath a net increase of 14,000 persons," said bureau chief economist Bruce Hockman today.

"It's actually well over 300,000 people entering employment, and more than 300,000 leaving employment in any given month."

The best performing states over the past year NSW 3.8 per cent, Queensland 3.5 per cent, and the Australian Capital Territory 2.7 per cent.

On Wednesday the ABS reported wages rose by 0.5 per cent in the March quarter, or 2.1 per cent through the year, as measured by the Wage Price Index.

This "continues a period of subdued first quarter rises, primarily driven by regular increases in the education and training and health care and social assistance industries," said Mr Hockman.

Employers' organisation the Australian Industry Group has said there is a link between low wage growth and persistent unemployment and underemployment - the number of people without jobs and people who want more work than they can get.

Additional factors include low inflation and, an AiG report emphasises, low productivity improvement.

"Other alleged causes of slow wages growth - such as low levels of union membership, the extent of casual employment, Australia's (wage) bargaining laws and migration - are not significant drivers of wages growth," said AIG chief executive Innes Willox.

The group's report found average nominal and real wages growth - the increases without accounting for inflation and the real buying power of rises when inflation is taken into account - went backwards over the decade from 2007 and fell to historically slow rates in 2016.

But it forecast wage growth "looks to have begun to lift from the trough from late 2017".

The AiG said "average wages have kept growing (weakly) in real terms across the Australia".


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