Before the stream of articles come out saying:
Wage growth was 2%pa
Wage growth was less than inflation
Let’s just say that Stat’s got the title wrong on this in strict terms. “Productivity adjusted” wages rose 2.0% … the LCI is a quality adjusted measure, just like the PPI, and the CGPI – it is supposed to measure inflationary pressures stemming from the labour market, not how much more money people have in their pockets.
Average hourly wages actually rose 3.2% (the QES), as the composition of labour changed and productivity increased. Furthermore, this is a gross wage measure – given that income taxes were cut to meet the increase in GST, we need to take GST out of the CPI number. As a result, average hourly wages rose more strongly than consumer prices.
Actually, wage growth has been very strong over the last two quarters while employment has been weak – this is starting to look more and more like a “two-speed labour market” … which is a pain. However, I doubt this real story will make it out as people are busily just going to use the LCI measure and CPI growth inappropriately to push whatever agenda they already wanted.
Why do I have to repeat this every quarter …