Wage growth slows in December quarter; childcare costs rising faster

Compared to the September 2018 quarter, December saw a decrease in the rate of wage growth across Australia, according to the latest wage price index from the Australian Bureau of Statistics (ABS).

Wages grew by 0.5 per cent in the December quarter relative to the September quarter and 2.2 per cent relative to the same period last year.

This is a typical pattern for the December quarter likely due to large companies reviewing salaries at the end of the financial year and therefore increasing salaries for the September quarter.

The Victoria public sector has seen the largest growth in wages over the past 12 months, with an average year-on-year increase of 3.2 per cent in the wage index. Western Australia and the Northern Territory have experienced the least growth in wages, with just 1.6 per cent average growth across all sectors in both states.

This muted increase in wages compares to an average quarterly increase of 1.4 per cent in childcare costs as measured by the quarterly CPI report released by the ABS for the December quarter.

This raises concerns that the savings created by the new Child Care Subsidy (CCS) in making childcare more affordable will soon be diminished as cost increases outstrip wage growth.