According to the latest data from the Australian Bureau of Statistics (ABS), the Wage Price Index (WPI) showed a 0.8 percent increase in the March quarter of 2023 on a seasonally adjusted basis. On an annual basis, the WPI rose by 3.7 percent.
Currently, wage growth has reached its highest point since 2012, with approximately 50 percent of workers experiencing pay increases surpassing 3 percent. However, only about one-in-10 employees are observing wage increases that come close to matching inflation.
ABS acting head of prices statistics, Leigh Merrington, said: “Annual wages growth of 3.7 per cent is the highest since September quarter 2012, reflecting low unemployment, a tight labour market and high inflation”.
However, another media release from ABS indicates in April, the seasonally adjusted unemployment rate experienced a marginal increase of 0.1 percentage point, reaching 3.7 percent.
Likewise, the employment-to-population ratio declined by 0.2 percentage points, settling at 64.2 percent, while the participation rate experienced a slight decrease of 0.1 percentage point, reaching 66.7 percent.
Bjorn Jarvis, ABS head of labour statistics, said: “with employment dropping by around 4,000 people and the number of unemployed increasing by 18,000 people, the unemployment rate rose to 3.7 per cent.”
Economists had anticipated a stable unemployment rate of 3.5 percent and the addition of 25,000 jobs. However, last month saw an estimated loss of 4,300 jobs, and it is projected that the number of job losses will continue to increase throughout the year.
But what is the correlation between these figures, and does a higher minimum wage affect hiring behaviour?
Fewer people may be hired as wages increase due to several factors. One being increased wages, meaning higher expenses for businesses, which can make them more cautious about hiring new employees to control costs and maintain profitability.
Research for a Report for the Low Pay Commission has found that employment growth is slower in the firms most affected by minimum wage increases.
Based on the research conducted, there are preliminary findings indicating that the minimum wage has influenced the hiring practices of firms. As the minimum wage is raised, there is a decrease in the number of job advertisements in that threshold, accompanied by an increase in positions paid at or above the new rate. This difference in job numbers demonstrates the impact of the minimum wage on hiring behaviour.
Unemployment by UOWTV