The WPI measures changes in the price of labour, unaffected by compositional shifts in the labour force, hours worked or employee characteristics
In September quarter 2021 the seasonally adjusted WPI:
| Jun Qtr 2021 to Sep Qtr 2021 % change | Sep Qtr 2020 to Sep Qtr 2021 % change | |
|---|---|---|
| Trend(a) | ||
| Australia | na | na |
| Private sector | na | na |
| Public sector | na | na |
| Seasonally Adjusted(b) | ||
| Australia | 0.6 | 2.2 |
| Private sector | 0.6 | 2.4 |
| Public sector | 0.5 | 1.7 |
| Original | ||
| Australia | 0.9 | 2.2 |
| Private sector | 1.0 | 2.3 |
| Public sector | 0.7 | 1.7 |
This issue includes:
The September quarter 2021 WPI saw a return to a regular pattern of growth after the disruptions of COVID-19 through 2020 and 2021. The private sector was the main driver of change.
The three largest states were the main contributors to growth, New South Wales, Victoria, and Queensland.
The most significant industries to contribute to growth this quarter were the Professional, scientific and technical services, Health care and social assistance and Construction industries.
Wage growth in the private sector through the year rose 2.4%, continuing the pattern of increases in annual growth since the series low in September quarter 2020.
The public sector through the year growth rose 1.7%, the first increase in the rate after slowing in each quarter since March quarter 2020.
Private sector wages rose 0.6% in September quarter 2021 in line with pre-pandemic September quarters. This quarter saw more employers conducting salary reviews than observed at the same time last year, when COVID-19 had a bigger influence on business operations. Small, isolated pockets of demand across a number of industries saw larger increases paid to attract and retain experienced staff.
Wage growth for the public sector rose to 0.5% and has continued to track below the private sector since September quarter 2020. This quarter saw a return to regular scheduled increases after a period of public sector wage freezes.
The drivers of wage growth over the September quarter 2021 can be seen returning to a regular quarterly pattern in the graph above. The contribution of jobs by the different methods of setting pay shows jobs covered under individual arrangements driving a large portion of wage growth. The wages and salaries for these jobs tend to react more quickly to labour market conditions than the jobs covered by enterprise agreements and awards.
Enterprise agreements remain a regular contributor to wages growth with a larger contribution observed this quarter, influenced by the end of the public sector wage freezes that have been a feature over the last 12-18 months.
For the second year the Fair Work Commission Annual Wage review has staggered the implementation of award increases over different time periods, with a proportion of the scheduled award rises contributing to the September quarter 2021 wage growth. While the previous review spread award-based rises over three quarters, this year will see the majority of award-based rises over the September and December quarters of 2021.
To provide further insight on the drivers of wage change for the WPI, the ABS has analysed the frequency of increases for jobs covered by the different methods of setting pay to examine the effect the COVID-19 pandemic has had on patterns of wage growth.
Prior to the COVID-19 pandemic the frequency of wage rises followed a similar pattern in September quarters, generally recording annual increases. By looking at the jobs recording a wage rise this quarter against previous September quarters, and the time between wage rises, we can see the disruption that COVID-19 has had on the regular timing of wage growth.
Over the last ten years the WPI would normally see 35 to 40% of jobs record a wage rise in the September quarter. The proportion of jobs with a wage rise last September quarter was significantly lower at around 20% as wage discussions were postponed and wage freezes employed by organisations as a response to the pandemic. In September quarter 2021 the proportion of jobs recording a wage rise has returned to the previous range.
Of all the jobs covered by individual arrangements, 25% recorded a wage rise in September quarter 2021. A large proportion of these saw a significant shift away from their regular pre-COVID pattern of annual wage rises. Typically, around 55-60% of September wage rises are annual increases, while this quarter only 22% of these increases were annual. The proportions of wage rises occurring after an extended period (greater than one year) primarily due to wage freezes, and those recording a second increase within the year both grew. This second group were a combination of award-reliant jobs, which pay above award rates but track the frequency and size of award changes, and specific in-demand occupations that saw wages adjusting to new market rates.
Enterprise agreements across the private sector, state and commonwealth government have been affected by various wage freezes since the pandemic first impacted the Australian economy. September quarter 2021 has returned to a more regular pattern of wage rises with 35% of jobs reporting a wage rise. Historically, the majority of enterprise agreements reported a mix of regular annual and six-monthly wage rises. This year, wage freezes have tended to impact those enterprise agreements with a regular annual frequency, extending the time between wage rises to over a year. A number of new enterprise agreements have also begun after extended periods of negotiation with these jobs also seeing a first increase in over a year.
Annual increases have been a feature of Modern awards for some time with interruptions to this pattern occurring only around significant economic disruptions like the GFC and the COVID-19 pandemic. In the last two annual reviews the Fair Work Commission staggered the timing of award increases across 2020 and 2021. This change in timing meant that there was more than a year between wage rises in 2020 for over half of award jobs, and as a consequence less than a year between wage rises for those jobs in 2021. In pre-COVID years, a large proportion of award jobs would normally record wage rises in a September quarter (around 80%). With the staggered implementation of the latest Annual Wage Review only 55% of award jobs recorded an increase in the current quarter, with most others expecting rises in the December quarter 2021.
(c) analysis of the frequency of wage changes only includes jobs that have been in the survey for more than four quarters.
Original estimates:
Original estimates:
The Wage Price Index trend series was suspended from June quarter 2020 until more certainty emerges in the underlying trend in labour market activity over the COVID-19 period.
In the lead up to the June 2020 Wage Price Index release, the ABS advised that the method used to produce seasonally adjusted estimates would change from the "concurrent" method to the "forward factors" method during the COVID-19 period. The forward factors approach is better suited to managing large movements at the end point of series and ensures that these large movements do not have a disproportionate influence on the seasonal factors.
Given the disruption to the labour market during the COVID-19 period and the continuing use of the forward factors method to seasonal adjustment, the ABS recently undertook an extensive annual review of its seasonally adjusted Wage Price Index series. This review followed similar reviews that are progressively being undertaken across the ABS economic statistics program, and the outcome for Wage Price Index was to continue using the forward factors method. Through this process static forward factors were calculated for the next 4 quarters and implemented in the June 2021 release.
Further information can be found in the ABS article published on 23 July 2020 (Measuring the Wage Price Index during the COVID-19 pandemic).
The seasonally adjusted Wage Price Index series will continue to use the forward factors method for the foreseeable future and are expected to return to using concurrent adjustment when the risk of disruption from COVID-19 becomes sufficiently low.
The expenditure weights used to compile the WPI will be updated in the December quarter 2021 using the expenditure on wages and salaries from the 2021 Survey of Employee Earnings and Hours.
In line with updating to more recent technology formats, the ABS will progressively transition to releasing Excel files in the .XLSX format. This means that timeseries spreadsheets in the suite of prices statistics releases will be progressively upgraded from .XLS files to .XLSX files.
While this change will improve usability, it may also require changes to automated macros or similar programs that users may have in place that call on the current file extension format.
For Wage Price Index products, this change will take effect from the release of December data on 23 February 2022. Previously released data will not change.
The wage price indexes in Tables 1, 2b, 3b, 4b, 5b, 7b, 8b and 9b are updated and released every quarter. The corresponding financial year wage price indexes in Tables 2a, 3a, 4a, 5a, 7a, 8a and 9a are updated and released each June quarter for the preceding financial year. There are no financial year indexes created for Table 1.
Caution: Data in Data Explorer is currently released after the 11:30am release on the ABS website. Please check the reference period when using Data Explorer.
For information on Data Explorer and how it works, see the Data Explorer user guide.
This release previously used catalogue number 6345.0.
Price indexes published by the Australian Bureau of Statistics (ABS) provide summary measures of the movements in various categories of prices over time. They are published primarily for use in Government economic analysis. Price indexes are also often used in contracts by businesses and government to adjust payments and/or charges to take account of changes in categories of prices (Indexation Clauses).
Use of Price Indexes in Contracts sets out a range of issues that should be taken into account by parties considering the inclusion of an Indexation Clause within a contract utilising an ABS published price index.
The Wage Price Index FAQs page has answers to a number of common questions to do with price indexes and the Wage Price Index, in particular.