An interesting news feed passed across my screen this morning (courtesy RWE AusBusiness News; via Coretrading market software). It seems that wages in the three months to February grew by 1.1%. Frankly, even i yawned at that. However, the year-on-year figures are where the real interest begins.
It seems that in the year to February, AWOTE (average weekly ordinary time earnings) lifted 5.6% in the private sector and 6.3% in the public sector. Quick comments:
- The public sector is feeling more secure about the future than is the private sector.
- Is government spending under control?
- Are government workers displaying higher productivity lifts than private sector workers?
- If wage rises are a compensation for cost inflation then either
- compensation is getting ahead of inflatio or
- there is an expectation of rising inflation or
- this is a ‘catch-up’ for real or perceived previous wage restraint.
- This does not seem particularly good for those worried about interest rate rises.
The RBA tell us that inflation is running at 2.9%. That seems to be a strong premium for business to pay in the face of difficult economic conditions.
Your homework for today is to ponder on why inflation is a bad thing for the average person in Australia, and how wages and inflation interact.
For the purposes of this post, i reflect on comments from a rather brilliant fund manager a few years ago… He suggested that the share of profit being kept by corporates seemed to be at a historic high, relative to that received by labour. Is this the beginning of a long term move back to labour (ie, workers) receiving a bigger share of the profit pie?