News Service from House Harris

Average wages grow but pay packets to slow in 2009 - economists

SYDNEY, Feb 26 AAP - Wages continue to rise strongly but employees should expect slower growth in their pay as the economy turns down, economists say.

Annual pay, without bonuses, grew by 1.6 per cent in the November quarter and at a rate of 5.5 per cent year-on-year, the Australian Bureau of Statistics (ABS) said on Thursday.

The average full-time weekly wage, excluding bonuses, was $1,166.50 a week, seasonally adjusted, compared with $1,148.80 in the August quarter.

The annual average wage packet was $60,658.

ANZ senior economist Katie Dean said the rise in average wages reflected a strong jobs market during the first half of 2008.

Ms Dean said policy makers were more concerned about a slowing economy.

"This strong wages growth is largely a historical byproduct of a strong labour market," Ms Dean said.

"It won't worry our forward-looking central bank."

Commsec chief economist Craig James said firms' efforts to keep workers in a then-tight jobs market was a factor behind the wage-setting decisions in the second half of 2008.

In February 2008, the nation's jobless rate was at a 33-year low of 3.9 per cent.

"It reflects when unemployment was at record lows in the early part of 2008 and businesses were finding it hard to attract and retain staff," Mr James said.

Private sector ordinary time earnings rose by an annual pace of 5.9 per cent, seasonally adjusted, in November to $1,148.30 a week, translating into a salary of $59,712.

Pay for public sector employees had a smaller rise of four per cent, but had higher weekly earnings of $1,231.80, or $64,054 a year

Workers in the mining industry had the highest average weekly wage, $1,965.20, which equates to $101,514 a year.

Mr James said the inevitable rise in the unemployment rate in a slowing economy would cap large rises in wages in future.

The federal government recently revised its outlook for the unemployment rate to rise to seven per cent by June 2010, from January's 4.8 per cent.

"We are going to see a slowdown in wages growth over 2009," Mr James said.