ANALYSIS

Australia's wages at pre-COVID levels but economic scarring is as yet unveiled

Prime Minister Scott Morrison. Picture: Jonathan Carroll.
Prime Minister Scott Morrison. Picture: Jonathan Carroll.

Wage levels may have returned to pre-pandemic levels but the scarring from the great COVID disruption will be felt across the nation's labour market.

While the rise in wages to 2.2 per cent over the year to September shows a rebound from wage freezes incurred during the height of lockdowns, questions remain how politics will spin the figures ahead of the election.

Prime Minister Scott Morrison has hit the ground running, colourfully bragging the inbound summer will see a hot jobs boom with more than 280,000 additional jobs on offer.

But let's unpack that claim.

Migration has been cut off for close to two years, a labour supply pool which a number of businesses including farmers, construction and hospitality rely on and say they cannot find the workers domestically.

A cacophony of economic and business commentators have also warned the current skills shortage is partly a result of a skills mismatch, which won't be fixed until government incentive schemes like JobTrainer run a full cycle.

Ernst and Young chief economist Jo Masters told The Canberra Times in conversation, the jobs are out there but the skills mismatch is fuelling the high levels of job ads and vacancies currently being seen.

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"The people that are looking for jobs don't have the skills that are required for the jobs that we're creating and the graduates coming out of tertiary education aren't matching," she said.

Weekly payroll data from the Australian Bureau of Statistics shows there has been recovery on jobs re-added to the workforce. So the Prime Minister is right in saying jobs will be available, but is unclear whether Australians will fill the jobs void while migration levels are muted.

It is also worth noting the recent claim from the Prime Minister's Office is an analysis based on ABS data, however is not an official government source.

The public sector comparative to the private sector in the latest round of wages data has not seen the same recovery. Wages in the public sector only rose 1.7 per cent over the year, while collar professional jobs jumped 3.4 per cent.

Tighter labour market conditions will assist a boost in wages, a figure the Reserve Bank is keeping a hawkish eye on.

On Wednesday the RBA governor lamented cash rate settings would only begin to be considered once wages growth is above a 3 percentage mark.

Both claims by the Coalition and the captain of Australia's monetary policy show the pivotal role wages and jobs will play to the ongoing recovery of the economy into 2022, and will be a front and centre issue during the inbound election cycle.

The PM and his entourage will want jobs and the economy to be in tip top shape when for the when the party buses are rolled out nationally, with low unemployment, jobs growth and wages pinned up as the reason to vote blue.

Labor's argument will likely fixate on meaningful job creation and pull back from casualised work, a claim a number of union backers believe is eroding employment standards.

But with borders easing migration will return and bring some reprieve to the number of businesses unable to find workers. However, both major parties are to yet to confirm a reboot of skilled migration policy since the drawbridge was raised more than 18 months ago. Perhaps a little can-do capitalism may come in handy?

This story Wage levels return to pre-virus but the political spin has only started first appeared on The Canberra Times.