High-skilled professionals in Australia are leaving their jobs in search of higher wages, driving up wage pressures in the private sector.
According to the Reserve Bank of Australia (RBA), the professional and business service sectors had a particularly sharp increase in board mobility.
“Part of this increase reflected workers catching up on planned job changes that had been put on hold, as well as more workers feeling encouraged by strong labour market conditions to change jobs,” according to RBA board meeting minutes (pdf).
However, the RBA said the labour movement in Australia was different from the American “Great Resignation,” where job resignations rose to historically high levels when employment remained considerably low.
The higher rate of voluntary job turnover in some sectors could push employers to offer higher wages to retain their workers.
Professional services recorded the highest wage growth, at three percent, while other areas of the private sector had returned to pre-pandemic levels. In the public sector, wage growth remained subdued.
Workers with individual agreements increased their wages more quickly compared to workers with other pay arrangements.
Overall, wage growth had picked up but had only returned to the rates prior to the start of the pandemic.
“A further gradual pick-up in wages growth was expected as the labour market tightens,” the minutes stated, noting that uncertainty around the behaviour of wages as the unemployment rate declines to historically low levels.
The central bank found that businesses are generally expecting a 2.5 percent wage increase over the next year.
The outlook for travel and education exports had somewhat improved after the international border reopened earlier than previously expected.
“Education exports were expected to contribute to GDP growth over the coming years,” the minutes noted. “However, the near-term outlook for travel services had been clouded by the emergence of the Omicron variant of COVID-19, as there was some risk that it would give rise to renewed restrictions or travel hesitancy.”
While Omicron has caused some uncertainty, the high rate of vaccination gives the RBA confidence to expect that the economy’s recovery will not be derailed.
The board decided to maintain the historically low 0.1 percent cash rate for December as it remained committed to supporting monetary conditions to achieve full employment and its inflation target.
It once again repeated that the cash rate would not increase until the inflation rate is “sustainably” within the two to three percent range.
“This is likely to take some time and the board is prepared to be patient,” the minutes noted.
