No. 3 - Department of Treasury - The Western Australian Government

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Western Australian Economic Summary2006 No.3Another measure of wages growth is data on agreed increases in wagelevels. This measures general wage increases in registered agreements, andgives an indication of wage responses to changing labour market conditions.The Department of Consumer and Employment Protection collects data onindustrial agreements registered with the Western Australian IndustrialRelations Commission. Data collected on a quarterly basis are represented asan average annualised wage increase per employee.June 2006 data 1 show that the average annualised award increase peremployee over 2005-06 was 4.0%. In an historical context the increase isfairly low (Figure 14), which provides another indication that wagespressures are still fairly constrained.Real Wages 2Adjusting Western Australia’s Wage Price Index growth for changes inPerth’s CPI gives an indication of growth in real wages. Over theSeptember quarter, the Wage Price Index rose by 0.2% in real terms. In lessvolatile year average terms, the real Wage Price Index remained almostunchanged (down 0.1%) over the year to September 2006 compared to theyear to September 2005 (Figure 15).These results reflect comparatively strong inflation over the period, ratherthan weak wages growth. Real wages in Western Australia have been fairlyflat over the past two years, because high wages growth has been matchedby high inflation (see Consumer Prices on page 16).Figure 1510110099989796959493IndexREAL WAGE PRICE INDEXWestern Australia, (Deflated by Perth CPI)September 2006 = 100Introduction of GST92Sep-97 Sep-00 Sep-03 Sep-06Source: ABS Cat. 6345.0; 6401.0;1 Latest available data.2 Real wages are wages adjusted for inflation, as measured by the CPI.24 Department of Treasury and Finance
2006 No.3 Western Australian Economic SummaryLabour MarketEmployment and UnemploymentEmploymentWestern Australia’s employment growth has decelerated from the rapidexpansion experienced in 2004 and 2005. Rather than reflecting a decline inlabour demand, however, this slower growth appears due to supplyconstraints, reflected in low unemployment rates, high labour forceparticipation rates and a near-record proportion of the adult population inemployment.Labour demand indicators, such as advertised job vacancies and reportedskills shortages, show few signs of easing.In the year to November 2006 Western Australia’s employment increased by1.9% in trend terms, the slowest through–the-year growth since the year toFebruary 2004, and slower than national trend employment growth of 2.6%over the year. Of the States, only Tasmania and New South Wales recordedweaker trend employment growth in the year to November (Table 5).Western Australia’s monthly trend employment growth has beendecelerating since May 2006, but remains positive. Annual trendemployment growth peaked at 6.5% through the year to July 2005.Table 5TREND EMPLOYMENTGROWTHYear to November2006NSW 1.7%Vic 2.6%Qld 4.4%SA 2.7%WA1.9%Tas -0.9%NT 4.6%ACT 6.1%Aus 2.6%Source: ABS Cat. 6202.0Figure 167%6%5%4%3%2%1%0%-1%-2%-3%-4%EMPLOYMENT GROWTH, WA AND AUSTRALIATrend, Annual % ChangeNov-81 Nov-86 Nov-91 Nov-96 Nov-01 Nov-06Western AustraliaAustraliaSource: ABS Cat. 6202.0Department of Treasury and Finance 25
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No. 3 - Department of Treasury - The Western Australian Government

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