Canberra’s great public service wage slump

Wages for tens of thousands of Canberra workers have fallen dramatically short of the cost-of-living increases in the past 12 months, new Australian Bureau of Statistics figures reveal.


The ABS’s new Wage Price Index Data shows the ACT’s vital public sector, which employs 80,000 Canberrans, or nearly 40 per cent of the city’s workforce, shows wages growth in the local public sector at an almost stagnant 1.7 per cent in the past 12 months.

But one local economist said the city’s residents still enjoyed a higher standard of living than much of the rest of the nation despite the end of capital’s “golden period of growth”.

The Canberra Business Chamber was also trying to stay upbeat on Wednesday, saying the worst of federal public service cuts were over, and the resulting improvement in job security would have a positive effect on local consumer sentiment.

With the headline inflation figure at 2.1 per cent, the new ABS figures show many families in the capital are going backwards after years of stalled pay talks in the Commonwealth public service which employees more than a quarter of Canberra’s 215,000-strong workforce.

The shock wage figures come in the wake of recent territory government research showing no new full-time jobs being created, on a net basis, in the territory in 12 months.

While unemployment in the ACT remains low by national standards at 3.7 per cent, the 4,100 jobs created locally over the twelve months to March 2017 were all part time, according to new data from the territory government.

The national wage price index figures of overall growth of 1.9 per cent shocked observers on Wednesday,

Negative real wage growth has occurred only twice since current records began two decades ago: during the global financial crisis, and across nine months in 2013-2014.

Private sector wages in the ACT, at 2.1 per cent, managed to keep pace with inflation in the past 12 months, but it is the vital public sector figure that will be worrying local policy makers.

Associate Professor Ben Phillips, from the Australian National University’s National Centre for Social Research and Methods said he was not surprised to see subdued territory and federal wages growth.

“[it is] probably not surprising given Federal public service wage negotiations are struggling and perhaps that state governments are doing a little better given better shape of their books thanks to property market stamp duty bonanza in NSW and Victoria,” Mr Phillips said.

“Economic growth has been subdued in Canberra for several years which is no doubt heavily influenced by weak employment and wages growth in our heavily public sector dependent economic base.

“We are coming off a golden period of growth though through the last 10 or 15 years and we continue to enjoy a standard of living well above the rest of the nation.”

Canberra Business Chamber chief executive Robyn Hendry said the low wage growth was a concern but at least the ACT economy no longer had to contend with the fear of widespread job losses in the Commonwealth sector.

“While subdued wages growth in both the public and private sector are generally a concern for demand in discretionary spending in the ACT, as for the broader Australian economy, and for the retail sector in particular, what has been more important in recent times for the ACT is increased job security,” Ms Hendry said.

“Increased consumer confidence from an improved ACT employment outlook compared to the major contraction in public sector employment in 2013-2014 has resulted in relatively positive retail sales growth, albeit with some patchiness, in recent times.”

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