Bad news — the rut your pay packet has been stuck in will be there for a while.
That’s despite the government’s hopes that a big jump in company profits will trickle down and eventually benefit employees.
New economic figures released today showed company profits went up nine per cent in 2018, while wages rose just 1.7 per cent for the year to the end of December.
Wage growth in the December quarter was just 0.5 per cent, for those lucky enough to see their pay packets grow.
Speaking to the media in Canberra, Treasurer Josh Frydenberg highlighted the nation’s overall wages costs, which have increased because of job creation.
He said “households are benefiting” from an annual 4.3 per cent lift in the wages bill, which he described as “solid gains in the compensation of employees”.
He acknowledged this increase was “driven by strong employment growth” and the total wages rose because more people were working, but not necessarily because pay rates were going up.
The unemployment rate had fallen to 5 per cent, the lowest level in seven years, and to “a remarkable” 3.9 per cent in our largest state, New South Wales, a level not been seen since the 1970s.
More than 1.2 million new jobs had been created under this Coalition Government, the treasurer said, with the number of women now in the workforce at a cord high, and the gender pay gap at a record low.
The drought has rained on the government’s parade of other good economic news, as official figures today showed a slowdown in economic growth.
The national economy grew by 2.7 per cent in 2018, Mr Frydenberg said.
The latest available data — for the December quarter — record a rise of just 0.2 per cent, which Mr Frydenberg admitted was less than hoped for.
Certainly, it makes it harder for the economy to reach the three per cent growth target the government wants to hit.
Mr Frydenberg said that year-on-year through December the rate was just 2.3 per cent, described as “some moderation in growth”.
One big factor in the low growth result was the six per cent decline in farming income caused by the drought and floods in northern Queensland, which has flowed through to a decline in food manufacturing.
“The moderation in part reflects the impact of the drought, lower mining investment as we continue to move from the construction to the production phase, as well as a decline in residential construction activity from record levels,” Mr Frydenberg said.
The disappointing results, the last before the April 2 Budget, have not dampened Mr Frydenberg’s determination to deliver a surplus.
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