The latest enterprise agreements show public sector workers are being hurt by wage caps

by Greg Jericho

Stronger wage growth in the private sector is good news, but public sector workers continue to be left behind

The December quarter Trends in Federal Enterprise Bargaining agreements shows that there has been both a pleasing increase in the wage growth in the private sector but bad news for public sector workers.

While the average annual wage growth in private sector agreements in the December quarter of last year rsoe from 2.9% to 3.5% – the biggest one quarter jump since 2007 – public sector agreements showed just 2.3% average growth – the same as in the September quarter.

The increase in the private sector agreements is pleasing – and largely matches the quarterly average derived from the fortnightly figures. But the weak public sector growth displays just how damaging the public sector wage caps are for workers. The average length of these agreements is for 2.8 year. And given the Reserve Bank believes inflation will only fall to 3% by mid 2025, this is locking in savage losses in real wages for these workers.

Even private sector workers who are currently agreeing to wage rises of 3.5% for 3 years will see their real wages fall nearly 4% compared to December 2021.

The most recent fortnightly data also suggests the spike in private sector wage rises is not continuing to grow as the December boost was largely driven by strong growth in educational services and hospitality. The most recent fortnightly figures show a continuation of the 3.5% average growth.

These figures are pleasing because wages should be rising by at least 3.5%, and they highlight that wage agreements are being far from inflationary. But they also show that the fight for public sector workers to overcome wage growth caps needs to continue.

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