key points figure 1: real increase in national minimum wage economic... · minimum wage set...

ACTU Economic Bulletin – June 2014 –

Key points

As Australia’s minimum/average wage ratio has

fallen, earnings inequality and the incidence of

low pay have risen.

Countries with lower minimum/average wage

ratios tend to have higher earnings inequality and

incidence of low pay.

The relatively egalitarian character of Australia’s

labour market is threatened by further erosion of

the minimum/average wage ratio.

Minimum wage increases do not necessarily

reduce employment in theory, and much

evidence suggests they have not in practice.

The Commission decided to increase minimum

wages by 3%. The ACTU is concerned this won’t

be enough to prevent further increases in

inequality.

The Fair Work Commission recently announced it will

increase the National Minimum Wage (NMW) and all

award minimum wages by 3%, from 1 July. This is

lower than the increase sought by the ACTU, which

was $27 per week (4.3%) for the NMW and the

lowest award wages and 3.7% for higher award rates.

This Economic Bulletin sets out the reasons why the

ACTU advocated a $4.3%/3.7% increase to minimum

wages. The ACTU is concerned that if the minimum

wage continues to fall relative to average wages then

Australia’s labour market will continue to grow more

unequal.

Figure 1: Real increase in National Minimum Wage and parties’ positions in minimum wage reviews

Source: ACTU calculations based on past FWC/AFPC/AIRC decisions and ACTU/ACCI submissions. Deflated by the CPI (ABS 6401). Assumes 2.9% inflation to the Sept 2014 quarter.

The good news for Australia is that real wages are

higher than they were a decade or two decades ago,

unlike in some OECD countries. The bad news is that

this growth has been shared unequally, with wages

growing much quicker at the top end than for low-

paid workers.

The earnings of high-paid workers (those at the 90th

percentile) grew by an average of 2.5% in inflation-

adjusted terms between 2002 and 2012; the median

rose by 1.7% a year, while the NMW grew by 0.8% a

year. There are many reasons for rising wage

inequality, but the sharp fall in the minimum wage,

relative to median and average wages, has surely

played a role.

ACTU's claim

ACCI's position

Decision

-4%

-2%

0%

2%

4%

2000 2002 2004 2006 2008 2010 2012 2014

Real increase over level at previous review


Figure 2: Real weekly earnings of full-time non-managerial employees in 1992, 2002 and 2012

Source: ABS 6306, ABS 6401, ACTU calculations.

Figure 3: Average annual growth in real full-time non-managerial earnings: 2002 to 2012

Source: ABS 6306, ABS 6401, ACTU calculations.

Average full-time earnings grew by 2.9% in 2013.

Even though average wages growth was very slow,

relative to its typical pace over the past couple of

decades, the minimum wage still didn’t keep up

(rising by 2.6%).

Figure 4: Minimum wage bite – NMW as a % of average/median

Source: ABS 6302 (AWOTE), ABS 6310, ABS 6401, FWC.

A widely used way of comparing minimum wages

over time and across countries is the ‘minimum wage

bite’. This is the minimum wage as a proportion of

the average or median wage. In 2013, the NMW was

43.3% of average full-time earnings, the lowest ratio

on record. This ratio has fallen steadily for the past

two decades – it was 48.2% in 2003 and 55.2% in

1993. If average full-time earnings grow by more than

3% in 2014, the minimum wage bite will fall again.

Figure 5: Real weekly minimum/average/median full-time earnings

Source: ABS 6302 (AWOTE), ABS 6310, ABS 6401, FWC.

The fall in low-paid workers’ relative earnings isn’t

just due to some outlier industries (like mining and

$0

$500

$1,000

$1,500

$2,000

$2,500

Real 2012 dollars per week

- 1992

- 2002

- 2012

0.8%

1.2%

1.4%

1.7%

2.0%

2.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

NMW

10thpercentile

25thpercentile

50thpercentile

75thpercentile

90thpercentile

NMW as % of average

35%

40%

45%

50%

55%

60%

65%

Mar 94 Mar 99 Mar 04 Mar 09 Mar 14

Ratio

NMW as % of median

National Minimum

Wage

Average full-time earnings

$0

$400

$800

$1200

$1600

Mar 94 Mar 99 Mar 04 Mar 09 Mar 14

Real $ per week


utilities) experiencing rapid real wage growth and

dragging up the average. The minimum wage has

fallen relative to average wages even in the industries

in which low-paid workers are concentrated – retail,

hospitality, health care and social assistance, and

administrative and support services.

Figure 6: NMW as a percentage of average full-time earnings in industries with large proportion of low-paid workers

Source: ABS 6302 (AWOTE); FWC.

While Australia’s minimum wage bite has been

falling, that hasn’t been the case in most OECD

advanced economies. In 1992, Australia’s minimum

wage bite was nearly 10 percentage points higher

than the bite of any other OECD country. By 2002,

our bite was still the largest in the OECD, but had

fallen quite a bit. Over the past decade, Australia has

experienced the largest fall in the minimum wage

bite of any OECD country, and we are falling back to

the middle of the pack, as shown in Figure 7.

The Australian minimum wage bite has declined

during both economic booms and times of slower

growth. It has declined under each of the three

institutions that have had responsibility for adjusting

minimum wages over the past two decades.

If these trends continue, in around four years our bite

will be the same as Canada’s current bite and in

around five or six years it will be the same as the UK’s

current bite. In just two decades, if the trend

continues, Australia’s minimum wage will be worth

less than 30% of the average full-time wage, in the

vicinity of the present level in the United States. This

projection is shown in Figure 8.

40%

45%

50%

55%

60%

65%

70%

1993 1998 2003 2008 2013

Per cent

Accommodation & Food Services

Retail Trade Administrative & Support Services

Health Care & Social Assistance

Figure 7: Distribution of minimum wage bites in OECD countries

Source: OECD Stat and ACTU calculations. Chart shows the number of countries in 2.5 percentage point ranges. Bite=minimum FT wage as % of average.


Countries with lower minimum wage bites tend to

have greater earnings inequality (Figure 9). They also

tend to have a larger proportion of their workforce in

low paid jobs – those that pay less than two-thirds of

the median full-time wage (Figure 10).

Sure enough, earnings inequality and the incidence of

low pay have risen in Australia as our minimum wage

bite has fallen (Figure 11). We’ve gone from having a

notably egalitarian earnings distribution to one that is

middle-of-the-pack and increasingly unequal.

If Australia’s minimum wage keeps falling, relative to

average wages, the consequences won’t be dire

immediately. It will take a while to fully erode

Australia’s status as a relatively high minimum wage

country with a relatively equal wages distribution.

But over time, if the current trends continue,

Australia will start to resemble other advanced

economies with a relatively low minimum wage and

high earnings inequality. We are already a fair way

down this track.

Figure 9: Minimum wage bite and 50:10 earnings ratio in 2010

Figure 10: Minimum wage bite and low-pay incidence in 2010

Source: OECD Stat.

Australia

Belgium

Canada

Czech Rep Estonia

France

Greece

Hungary

Ireland

Israel

Japan

Korea

Luxembourg

Netherlands NZ

Poland

Portugal

Slovak Rep

Slovenia

Spain Turkey

UK

US

1.2

1.4

1.6

1.8

2.0

2.2

25% 35% 45% 55%

50:10 ratio

Minimum wage as a percentage of average

Australia

Belgium

Canada Czech Rep

Greece

Hungary Ireland

Israel

Japan

Korea

New Zealand

Poland

Portugal

Slovak Rep

Spain

UK

US

0

5

10

15

20

25

30

25% 35% 45% 55%Minimum wage as a percentage of average

Low pay incidence (Per cent)

Australia

United States

United Kingdom

Canada

0%

10%

20%

30%

40%

50%

60%

1990 2000 2010 2020 2030

Minimum wage as % of average wage

Other OECD countries

(excl.Mexico)

If past trends continue, we’ll be: -where Canada is now in 4 years; -where the UK is now in 5 years; and -where the US is now in 23 years.

The US would be here with President Obama's proposed $US10.10 minimum wage

Projection

Source: OECD Stat and ACTU calculations. The projection assumes a 0.67 percentage point decline per year, the average since 1990.

Figure 8: Minimum wage bites in Australia, Canada, UK and USA, including projected Australian bite

http://stats.oecd.org/Index.aspx?DataSetCode=DEC_I


There’s a precedent for this kind of erosion – the

United States. In 1968, the US minimum wage was

worth US$10.40 in 2013 prices. This is higher than the

Australian minimum wage today - the Australian

minimum wage (AU$16.37) is worth US$10.20 in

purchasing power terms.

Contrary to what is learned in microeconomics 101 or

in much press coverage, a minimum wage does not

necessarily cost jobs. Employers have power in the

labour market, which means they’re often able to get

away with paying workers less than their marginal

product.1 As a result, it’s possible for minimum wages

to secure a fair wage for the low-paid without

harming employment.

1There are some models (eg. efficiency wages) in which a

minimum wage set modestly above the market-clearing rate does not necessarily cause disemployment. There are also arguments that the optimal level of disemployment from a minimum wage may not be zero, if earnings effects are large and positive.

In a perfectly competitive labour market, the

economics 101 model, individual firms face a

horizontal (ie. infinitely elastic) labour supply curve.

This means it’s assumed that firms can immediately

fill all vacancies by paying the prevailing market

wage. If a firm expands its workforce, the market

wage does not change, as each firm is too small to

affect the market outcome. The model assumes

employees face no costs of job search, have perfect

information about all vacancies, and have identical

preferences to one another. Competition among

employers leads to a single wage for each type of

worker (adjusted for non-financial benefits of the

job). If any employer pays even slightly below the

market wage, the firm will immediately lose all

existing workers and will be unable to fill vacancies.2

The predictions of the perfectly competitive model

don’t fit with many empirically observed features of

labour markets, such as: the existence of vacancies

throughout the business cycle; substantial differences

2 Bhaskar, V., Manning, A. and To, T. 2002, ‘Oligopsony and

Monopsonistic Competition in Labor Markets’, Journal of Economic Perspectives, vol. 16, no. 2, Spring, pp. 155-174.

Source: OECD Stat

Figure 11: The incidence of low pay and earnings inequality (the 50:10 ratio) over time in OECD countries

http://stats.oecd.org/Index.aspx?DataSetCode=DEC_I


in wages across workers with similar characteristics

and jobs; the differences in turnover between

industries that pay high wages versus those that pay

low wages; the fact that large firms tend to pay

higher wages; the willingness of some employers to

pay for general training rather than only the

acquisition of firm-specific skills; the existence and

persistence of racial and gender pay gaps; and the

repeated empirical observation that minimum wage

increases do not necessarily reduce employment.3

Other models of the labour market have been

developed that feature more realistic assumptions

and can explain these observed features of real-world

markets. A widely-used model is ‘dynamic

monopsony’. In a model of this sort, the labour

supply curve facing a firm slopes upwards (rather

than being horizontal as in the case of perfect

competition). This can occur because of any number

of frictions, or deviations from the implausible

assumptions of the perfectly competitive model.

Workers may not have perfect information about all

alternative positions and may therefore be cautious

in changing jobs. Job search may be costly. Workers

and jobs may be mismatched geographically, and

changing jobs may involve greater transport costs.

Workers may not all have identical preferences

regarding jobs. These frictions can result in

employers having market power, which they can

exploit to pay workers less than the value of what

they produce.

3 For further discussion see Zavodny, M. 1998, ‘Why Minimum

Wage Hikes May Not Reduce Employment’, Economic Review, Federal Reserve Bank of Atlanta, pp. 19-20; and Bhaskar, et al. 2002.

The ‘dynamic’ in dynamic monopsony models

indicates that the market power held by employers in

such models stems from frictions in the labour

market. An employer in a dynamic monopsony model

need not be a monopolist in the product market, nor

the sole purchaser of labour in the region or industry.

A single employer in a market with many employers

can have monopsonistic power if workers bear costs

of job search.

Whereas a firm in a perfectly competitive market can

expand employment at the prevailing market wage,

ie. the labour supply curve to the firm is horizontal, a

firm with monopsony power that wishes to expand

its workforce and fill vacancies may need to pay a

higher wage than is paid to its existing workforce. If it

offers the higher wage necessary to fill vacancies, it

will need to increase the wage of existing employees.

In this case, the firm faces an upward sloping supply

curve rather than the infinitely elastic, horizontal

supply curve envisaged by the perfectly competitive

model, in which firms can hire an infinite number of

additional employees at the prevailing wage. In a

situation where firms have monopsony power and

face an upward sloping demand curve, their profit-

maximising level of employment and wages will both

be lower than under perfect competition.

A minimum wage, in such a model, can increase both

employment and earnings. If the minimum rate is

set at or below the marginal product of labour,

employment will not fall (and could rise) as a result of

the imposition of the minimum rate. Monopsonistic

models do not have an unambiguous prediction for

the employment effects of a minimum wage.

Bhaskar, et al. note that “a minimum wage set

moderately above the market wage may have a


positive effect or a negative effect on employment,

but the size of this effect will generally be small.”4

Much evidence from overseas suggests that

minimum wage rises haven’t reduced employment.

The famous study by David Card and Alan Krueger in

the 1990s compared fast food employment in New

Jersey and Pennsylvania after one state increased its

minimum wage and the other didn’t.5 They didn’t

find a significant effect on employment. More recent

studies have extended this approach.

A landmark paper looked at US restaurant

employment in 288 different pairs of counties that

were next to one another, where the counties had

different minimum wages.6 This approach is like

conducting dozens of Card-Krueger style natural

experiments and pooling them together. They find

that minimum wages are effective in boosting pay,

but they don’t harm employment. Subsequent

studies using similar methodology have reached

similar findings.7

4 Ibid.

5Card, D. and Krueger, A. 1994, ‘Minimum Wages and

Employment: A Case Study of the new Jersey and Pensylvania Fast Food Industries’, American Economic Review, vol. 84, no. 4, pp. 772-793. 6 Dube, A., Lester, T.W. and Reich, M. 2010, ‘Minimum Wage

Effects Across State Borders: Estimates Using Contiguous Counties’, The Review of Economics and Statistics, vol. 92, no. 4, pp.945-964. 7 See the summary in Dube, A. 2013, Statement before the US

Senate Committee on Health, Education, Labor & Pensions Hearing on ‘Keeping up with a Changing Economy: Indexing the Minimum Wage’, March 14, p.11.

Figure 12: Distribution of estimated employment elasticities from 64 natural experiments in the US

Source: Dube, Lester and Reich 2010.

These studies aren’t alone. A paper in the British

Journal of Industrial Relations examined 1 494

estimates of the employment effect of US minimum

wage rises published in 64 different papers.8 They

found that there was virtually no employment effect

from minimum wage rises.

Similarly, in the UK, the evidence has been clear.

When the UK first introduced a minimum wage in

1999, they initially took a cautious approach. The UK

Low Pay Commission was worried about negative

effect on employment. But those negative effects

never became apparent.

The UK’s minimum wage is now 75% higher than it

was when it was introduced, while the UK CPI has

risen by just 37% over the same period. The UK Low

Pay Commission has now commissioned over 130

pieces of research from accomplished academic

economists, the overwhelming majority of which find

minimum wages boost workers’ pay, but don’t harm

8 Doucouliagos, H. and Stanley, T.D. 2009, ‘Publication Selection

Bias in Minimum-Wage Research? A Meta-Regression Analysis’, British Journal of Industrial Relations, vol. 47, no. 2, pp.406-428.

0.0

0.5

1.0

1.5

2.0

-1 0 1 2

Density

Elasticity

http://www.help.senate.gov/imo/media/doc/Dube.pdf

http://www.help.senate.gov/imo/media/doc/Dube.pdf


employment. For example, Draca, Machin and Van

Reenen find “no significant effects on employment or

productivity in any sector.” 9

In Australia, there’s less evidence about the effect of

minimum wages on employment. But some of the

evidence that is available suggests that past increases

haven’t cost jobs. A 2011 paper in the British Journal

of Industrial Relations found no significant effect of

Australian minimum wage rises on teenagers.10

Another paper looked at the effect of youth award

rates and found no evidence that they reduce

employment.11 Research from academics at ANU

suggests that the Australian employers have power in

the labour market and that the ‘dynamic monopsony’

model appears to fit the facts in Australia.12

Although Australia’s minimum wage remains

somewhat high compared to those of most

economies, our labour market performance has been

strong. We have a lower rate of unemployment, and

higher employment-to-population ratio, than many

other advanced economies.

9 Draca, M., Machin, S. and Van Reenen, J. 2011, ‘Minimum

Wages and Firm Profitability’, American Economic Journal: Applied Economics, vol. 3, no. 1, pp.129-151. 10

Lee, W-S. and Suardi, S. 2011, ‘Minimum Wages and Employment: Reconsidering the Use of a Time Series Approach as an Evaluation Tool’, British Journal of Industrial Relations, vol.49, no.S2, pp. 376-s401. 11

Olssen, A. 2011, ‘The Short-Run Effects of Age-Based Youth Minimum Wages in Australia: A Regression Discontinuity Approach’, Paper presented at New Zealand Association of Economists Annual Conference, Wellington, 29 June-1 July 2011. Paper available from: http://www.motu.org.nz/publications/detail/the_short-run_effects_of_age_based_youth_minimum_wages_in_australia_a_regre [Accessed 11 March 2014]. 12

Booth, A.L. and Katic, P. 2010, ‘Estimating the Wage Elasticity of Labour Supply to a Firm: What Evidence is there for Monopsony?’, CAMA Working Paper 35/2010, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, Australian National University, Canberra.

Figure 13: Unemployment rate and minimum wage level in OECD countries in 2012

Source: OECD Stat

There are, of course, many factors that affect the

level of employment and unemployment in a country,

including monetary and fiscal policy. Minimum wages

are far from the only factor. Nevertheless, it’s

important to note that many countries (including

Australia) that have relatively high minimum wages

also have relatively strong labour market

performance. This fact is often omitted from public

debate about minimum wages.

Figure 14: Employment-to-population ratio (aged 15-64) and minimum wage level in OECD countries in 2012

Source: OECD Stat

Australia Austria

Belgium Canada

Chile

Czech R

Estonia France

Greece

Hungary

Ireland

Israel

Japan Korea Lux

Mexico Nether

NZ

Poland

Portugal

Slovak R

Slovenia

Spain

Turkey UK US

0

5

10

15

20

25

$0 $2 $4 $6 $8 $10 $12Minimum wage in 2012 (USD PPP)

Unemployment rate in 2012 (Per cent)

Australia Austria

Belgium

Canada

Chile

Czech R Estonia

France

Hungary

Ireland

Israel

Japan

Korea Lux

Mexico

Nether

NZ

Poland

Portugal

Slovak R

Slovenia

Spain

UK

US

55

60

65

70

75

80

$0 $2 $4 $6 $8 $10 $12Minimum wage in 2012 (USD PPP)

Employment-to-population ratio in 2012 (Per cent)

http://www.motu.org.nz/publications/detail/the_short-run_effects_of_age_based_youth_minimum_wages_in_australia_a_regre




The relationship (or more aptly the lack of a

significant relationship) between minimum wages

and employment or unemployment depicted in

Figure 13 and Figure 14 remains much the same if the

minimum wage bite is used rather than the minimum

wage in purchasing power terms. Similarly, when the

change in the minimum wage (in either PPP or bite

terms) is compared to the change in the employment

or unemployment rates, the relationship is weak and

runs in the opposite direction to the one that is

typically assumed in public commentary. High

minimum wages are not incompatible with high

levels of employment and low levels of

unemployment.

The Booth School of Business at the University of

Chicago periodically surveys a panel of high profile

economists at top US universities regarding their

views on various matters of public policy. The panel

consists of accomplished, senior faculty members of

elite research universities, including winners of the

Nobel Prize and John Bates Clark Medal. It is diverse

politically, geographically, and in terms of the

respondents’ age. 13

13

IGM Booth School of Business 2014, ‘Economic Experts Panel’, University of Chicago. Available from: http://www.igmchicago.org/igm-economic-experts-panel [Accessed 18 March 2014]

Figure 15: Responses by economists to the statement “raising the federal minimum wage to $9 per hour would make it

noticeably harder for low-skilled workers to find employment”

Source: IGM Booth School of Business, University of Chicago 2013. Responses weighted by each expert’s confidence.

Figure 16: Responses by economists to the statement “the distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy”

Source: IGM Booth School of Business, University of Chicago 2013. Responses weighted by each expert’s confidence.

The panel of economists were recently asked their

views about minimum wages. They were asked to

respond to two questions, as shown in Figure 15 and

Figure 16Error! Reference source not found.. Both

questions pertained to a proposed increase in the US

federal minimum wage from $US7.25 to $US9 per

hour – a 24.1% nominal increase. Recall that the

Australian minimum wage is currently worth

US$10.20 in purchasing power terms.

0%

10%

20%

30%

40%

50%

60%

StronglyAgree

Agree Uncertain Disagree StronglyDisagree

0%

10%

20%

30%

40%

50%

60%

StronglyAgree

Agree Uncertain Disagree StronglyDisagree

http://www.igmchicago.org/igm-economic-experts-panel

http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV

http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV


The economists were more or less evenly divided on

the question of whether this increase would make it

noticeably harder for low-skilled workers to find

employment. A plurality (47%) agreed that this would

be a desirable policy. Only 11% disagreed. When

weighted by their confidence, 62% agreed or strongly

agreed that a 24.1% nominal increase and indexation

to inflation would be desirable, while 16% disagreed

or strongly disagreed. This is a remarkable level of

support for a fairly large (24.1%) increase in the US

minimum wage.

In January this year, an open letter from over 600

economists to US Congressional leaders in support of

a $US10.10 minimum wage was released.14 The

signatories include seven Nobel laureates (Arrow;

Diamond; Maskin; Schelling; Solow; Spence; and

Stiglitz) and a number of past Presidents of the

American Economic Association.15

The letter states that a $10.10 minimum “would

provide higher wages for close to 17 million workers”

and indirectly benefit another 11 million. The

economists note that:

In recent years there have been important

developments in the academic literature on the effect

of increases in the minimum wage on employment,

with the weight of evidence now showing that

increases in the minimum wage have had little or no

negative effect on the employment of minimum-wage

workers, even during times of weakness in the

labo[u]r market.

14 ‘Economists’ Statement on the Federal Minimum Wage’,

Economic Policy Institute. Available from: http://www.epi.org/minimum-wage-statement/. [Accessed 14 March 2014]. 15

A rival letter was organised by the National Restaurant Association, although the involvement of that Association was not known to some signatories and was not initially disclosed when the letter was made public.

The proposed increase to which these eminent

economists have lent their support would see the US

federal minimum wage rise by 39.3% in nominal

terms. This would take it very close to the Australian

NMW in purchasing power terms.

Many economists support a substantial increase in

the US minimum wage, to lift the US rate close to

Australia’s. This reflects the substantial advances in

both theory and evidence about the functioning of

labour markets and the welfare-enhancing potential

of fair minimum wages.

A decent minimum wage remains a cornerstone of

Australia’s system of social protection. If the

minimum wage keeps falling, relative to average

wages, earnings inequality is likely to continue to rise.

Australia’s labour market will soon resemble those of

the UK and Canada if past trends continue. The 3%

increase in minimum wages in 2014 is unlikely to be

enough to stop the minimum wage bite falling again.

Please send any comments, corrections, criticisms or

compliments to Matt Cowgill at [email protected].

http://www.epi.org/minimum-wage-statement/

mailto:[email protected]


The tables and charts below summarise the latest

available data about the Australian labour market.

Table 1: Summary of labour force figures

Level Monthly change

Year-ended change

Employed persons 11,564,600 -4,800 98,700

- Full time employment 8,068,300 22,200 49,700

- Part time employment 3,496,200 -27,000 49,000

Working age population 19,013,300 29,900 339,800

Employment-to-population ratio

60.8% -0.1 ppts -0.6 ppts

Unemployment rate 5.8% 0.0 ppts 0.3 ppts

Unemployed persons 717,100 3,200 44,000

Participation rate 64.6% -0.1 ppts -0.4 ppts

Underemployment rate (quarterly)

7.6 0.2 ppts 0.3 ppts

Source: ABS 6202, seasonally adjusted.

Figure 17: Change in employment between April and May 2014

Source: ACTU calculations based on ABS 6202, seasonally adjusted.

Figure 18: Change in employment in the year to May

Source: ACTU calculations based on ABS 6202, seasonally adjusted.

Figure 19: Unemployment rate

Source: ABS 6202.

Figure 20: Employment to population ratio (15+)

Source: ABS 6202.

5.9

-19.0

-13.1

16.3

-8.0

8.3

22.2

-27.0

-4.8

-30

-20

-10

0

10

20

30

Full time Part time Total

Thousands

Males Females Total

19.0 14.0

33.0 30.7 35.0

65.7

49.7 49.0

98.7

0

20

40

60

80

100

120

Full time Part time Total

Thousands

Males Females Total

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

May 04 May 06 May 08 May 10 May 12 May 14

Per cent

Seasonally adjusted Trend

58

59

60

61

62

63

64


Per cent


Figure 21: Unemployment rates by state/territory

Source: ABS 6202, trend.

Figure 22: Participation rate

Source: ABS 6202.

Figure 23: Underemployment and unemployment rates

Source: ABS 6202, trend.

Figure 24: Employment growth in the year to May 2013

Source: ACTU calculations based on ABS 6202, trend.

3.3

3.7

5.1

5.5

6.3

6.3

6.7

7.5

5.6

4.0

4.9

5.5

5.9

5.7

6.1

7.8

0 2 4 6 8 10

NT

ACT

WA

NSW

Qld

Vic

SA

Tas

Per cent

May 2013

May 2014

63.0

63.5

64.0

64.5

65.0

65.5

66.0

74.0

74.5

75.0

75.5

76.0

76.5

77.0


15+ (%) 15-64 (%)

15-64 (LHS) 15+ (RHS)

0

2

4

6

8

10

12

14


Per cent

Unemployment

Underemployment

-51.1

-33.3

-15.8

-9.8

-9.3

-9.1

-6.1

0.6

4.0

4.6

9.6

12.4

14.1

19.1

22.3

25.7

33.4

43.2

46.8

-60 -40 -20 0 20 40 60

Wholesale Trade

Accommodation & Food Services

Arts & Recreation Services

Information Media &…

Public Administration & Safety

Financial & Insurance Services

Transport, Postal &…

Administrative & Support…

Mining

Electricity, Gas, Water & Waste…

Professional, Scientific &…

Retail Trade

Construction

Manufacturing

Education & Training

Rental, Hiring & Real Estate…

Agriculture, Forestry & Fishing

Health Care & Social Assistance

Other Services

Thousands


Table 2: Summary of September quarter National Accounts

Level Quarterly

change

Year-ended change

Quarterly real GDP 394929 1.1% 3.5%

Real GDP per capita 16858 0.7% 1.8%

Labour productivity (total economy)

- 0.2% 2.1%

Labour productivity in the market sector

- 1.0% 2.7%

Terms of trade - -1.2% -3.9%

Wages share of income

53.0% -0.2 -0.9

Profits share of income

27.4% 0.0 0.9

Source: ABS 5206.

Figure 25: Growth in real GDP per year

Source: ABS 5206 and ACTU calculations.

Figure 26: Annual growth in nominal unit labour costs

Source: ABS 5206 and ACTU calculations. Non-farm.

Figure 27: Annual growth in labour productivity (GDP per hour)

Source: ABS 5206.

Figure 28: Growth in output (gross value added) – year to March 2013

Source: ABS 5206.

20-year average,

3.3%

0%

1%

2%

3%

4%

5%

6%

Mar 04 Mar 06 Mar 08 Mar 10 Mar 12 Mar 14


20-year average,

2.5%

-2%

0%

2%

4%

6%

8%


Seasonally adjusted

Trend

-2%

-1%

0%

1%

2%

3%

4%

5%



Work Choices

Fair Work Act

Year-ended growth

-4.2%

-3.6%

-3.4%

-2.2%

-1.6%

0.4%

0.7%

0.9%

1.8%

2.2%

2.8%

3.6%

3.8%

3.9%

5.1%

7.2%

7.5%

8.2%

14.1%

-15% -5% 5% 15% 25%

Professional, scientific and…

Manufacturing

Transport, postal and…

Electricity, gas, water and…

Wholesale trade

Other services

Accommodation and food…

Information media and…

Retail trade

Education and training

Administrative and support…

Agriculture, forestry and fishing

Public administration and…

Arts and recreation services

Health care and social…

Rental, hiring and real estate…

Construction

Financial and insurance…

Mining

Annual GVA growth


Table 3: Summary of prices and wages data

Latest

quarter

Annual growth

rate

Wage Price Index (WPI) March 2.6%

Full-time average weekly ordinary time earnings (AWOTE)

November 2.9%

Real full-time AWOTE November 0.2%

Total average weekly earnings (AWE)

November 3.0%

National Minimum Wage

July 2.6%

Headline CPI March 2.9%

Underlying CPI (trimmed mean)

March 2.6%

Employees’ cost of living (LCI)

March 2.1%

Gender pay gap November -0.5ppts

Source: ABS 6345, ABS 6302, FWC, ABS 6401, ABS 6467, ACTU calculations.

Figure 29: Annual growth in the CPI and workers’ cost of living (Employee LCI)

Source: ABS 6467, ABS 6401.

Figure 30: Headline and underlying CPI inflation

Source: ABS 6401.

Figure 31: Wage Price Index growth

Source: ABS 6345.

Figure 32: WPI growth in the public and private sectors

Source: ABS 6345.

-1%

0%

1%

2%

3%

4%

5%

6%


Underlying CPI

Employee LCI

0%

1%

2%

3%

4%

5%


Per cent

RBA's target band

Headline CPI

Underlying CPI

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Sep 98 Sep 03 Sep 08 Sep 13

Trend Seasonally adjusted

Long-run average

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%


Private

Public


Figure 33: WPI growth in the year to March by industry

Source: ABS 6345.

Figure 34: Range of WPI growth rates across industries

Source: ABS 6345 and ACTU calculations.

Figure 35: WPI growth in the year to March by state

Source: ABS 6345.

Figure 36: Average weekly ordinary time earnings for full-time adults

Source: ABS 6302.

Figure 37: Average annualised wage increase in federal enterprise agreements

Source: Department of Employment, Trends in Federal Enterprise

Bargaining. )

3.3%

3.3%

3.2%

3.2%

3.1%

3.0%

2.9%

2.8%

2.8%

2.6%

2.6%

2.4%

2.4%

2.4%

2.3%

2.3%

2.3%

2.2%

1.9%

0% 1% 2% 3% 4%

Arts and recreation services

Electricity, gas, water and…

Construction

Education and training

Manufacturing

Public administration and…

Health care and social…

Rental, hiring and real…

Financial and insurance…

Australia

Transport, postal and…

Retail trade

Retail trade

Mining

Wholesale trade

Accommodation and food…

Administrative and…

Other services

Professional, scientific and…

0%

1%

2%

3%

4%

5%

6%

7%


Range of growth rates in all industries

Australia

3.2%

2.8%

2.7%

2.6%

2.6%

2.6%

2.6%

2.3%

2.3%

0% 1% 2% 3% 4%

SA

NT

Victoria

WA

NSW

Australia

Qld

Tas

ACT

$2,469.60

$1,730.70

$1,672.00

$1,649.40

$1,619.90

$1,534.90

$1,519.70

$1,450.50

$1,437.00

$1,390.50

$1,387.10

$1,368.10

$1,321.00

$1,290.60

$1,286.90

$1,281.60

$1,103.20

$1,048.40

$1,031.80

$0 $1,000 $2,000

Mining

Professional, Scientific…

Information Media and…

Financial and Insurance…

Electricity, Gas, Water…

Public Administration…

Education and Training

Construction

All Industries

Transport, Postal and…

Wholesale Trade

Health Care and Social…

Arts and Recreation…

Manufacturing

Rental, Hiring and Real…

Administrative and…

Other Services

Accommodation and…

Retail Trade

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Dec 93 Dec 98 Dec 03 Dec 08 Dec 13

Per cent

All current agreements

Agreements lodged in

quarter

http://employment.gov.au/trends-federal-enterprise-bargaining

http://employment.gov.au/trends-federal-enterprise-bargaining

key points figure 1: real increase in national minimum wage economic... · minimum wage set...

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