Australian professionals who work from home are given some very bad news by job website SEEK
Australians who work from home in white-collar jobs are missing out on significant pay raises, new SEEK data shows.
The bad news comes as unemployment remained at a 48-year low of 3.5 percent in June, while the Australian Bureau of Statistics also revealed on Thursday that 32,600 jobs had been created.
The historically low unemployment rate does not translate into decent wage increases for everyone.
Matt Cowgill, a senior economist at the SEEK employment website, said white-collar workers who worked from home had the weakest wage growth, even as labor demand continued to rise this year.
“Looking at advertised salary data by industry, the slowest growth can be seen in sectors such as advertising, art and media, in the public sector, in consulting and strategy,” he told Daily Mail Australia on Thursday.
“These are white-collar professional industries where people are generally able to work from home, at least some of the time.”
Australians who work from home are missing out on significant pay raises with new data showing salary growth likely peaked due to interest rate hikes (pictured shows a Sydney woman working remotely)
Advertised salaries on the SEEK employment website rose 4.8 percent in the year to April, but compensation in the marketing and communications sector rose only 1.6 percent.
Consulting and strategy fared even worse, growing just 1.4 percent, while government jobs delivered a paltry 1 percent pay rise.
The advertised salary increases on the SEEK website seem to have peaked and are slowing down 4.7 percent in May and 4.5 percent in June.
With inflation rising at 5.6 percent, workers are actually suffering from a drop in real wages.
The low unemployment rate means the Reserve Bank of Australia is likely to raise rates again, with new governor Michele Bullock warning last month it would become more difficult to control inflation.
“If unemployment remains too low for too long, inflation expectations will rise, which will make it much more difficult for monetary policy authorities to curb inflation,” she told the Australian Industry Group in Newcastle.
“If inflation expectations become ingrained and wages respond to them and wage demands respond to them, there is a risk that we will end up in a situation where inflation is very difficult to control.”
Interest rate hikes have also reduced employers’ ability to offer higher wage increases to new hires.
‘It looks like it, yes,’ said Mr Cowgill.
“We actually saw pretty rapid advertised salary growth through 2022 and it’s slowed down.”
But Mr Cowgill said it was too early to predict cuts for white-collar workers as the economy slowed.
“It’s all still so new, this kind of post-pandemic, work-from-home dynamic or hybrid work dynamic that I don’t think anyone is confident enough to predict how it’s going to play out,” he said.
Unemployment remained at a 48-year low of 3.5 percent in June while 32,600 jobs were created, the Australian Bureau of Statistics revealed on Thursday (pictured is a barista from Sydney)
“This is still a very tight job market, the unemployment rate is still in the middle three percent, which is the lowest we’ve seen from the mid-1970s to last year.”
Despite the slowdown, Mr Cowgill said changing jobs was still a better way to get a pay rise, with advertised salaries on SEEK growing much faster than the official wage price index of 3.7 per cent.
“The best way to get a raise is to get a new job,” he said.
“When you’re in the same job for an extended period of time, there’s not necessarily, at least in some positions, no renegotiation to reflect people’s additional accumulated skills and experience.
“Maybe they get an annual bump that reflects inflation and things like that, but if you’re going for a new job, maybe that better reflects the skills and experience you’ve gained.”
While unemployment remained low, the underemployment rate of 6.4 percent, where workers want more hours, was 0.6 percentage points above last year’s low.
ANZ economics chief Adam Boyton said this suggested job growth was slowing.
“The slowdown in economic activity suggests that employment growth and growth in hours worked should cool significantly in the coming months,” he said.
The low unemployment rate means the RBA is likely to raise rates again, with new governor Michele Bullock last month warning it would become more difficult to control inflation
Mr Boyton said data on job vacancies and business confidence suggested ‘the unemployment rate will rise higher in the coming months’.
Cowgill said that while there was no evidence of a wage-price spiral, the unemployment rate would have to rise for inflation to fall back within the Reserve Bank’s target of two to three percent.
“No one can tell you with a high degree of certainty whether that number is 4.5 percent or 4 percent or 5 percent or anything in that range,” he said.
“I think Governor-elect Bullock’s comments were fair in that she is, I suspect, probably right that if unemployment were to remain at current levels for an extended period of time, in the mid-threes, we would see wage growth more than currently expected and that could pick up to unsustainable levels.”
The June data covered the period before the minimum wage rose 8.6 percent on July 1 for 184,000 of Australia’s lowest paid workers.
This happened as compensation wages rose 5.75 percent for an additional 2.67 million workers.
Inflation data for the June quarter, to be released next Wednesday, may give a better indication of whether the Reserve Bank will raise rates again in August.