Min­ing wages hit but out­look im­proves

Pilbara News - - News - Shane Wright

Wages in WA have been hit harder than ex­pected, the Re­serve Bank of Australia has con­ceded, while sug­gest­ing the worst of the end of the min­ing con­struc­tion boom is over.

Bank as­sis­tant gover­nor Christo­pher Kent said last week there were good signs for the econ­omy over the com­ing months and years that should help drive down the un­em­ploy­ment rate.

WA’s job­less rate is now more than 6 per cent, with full-time em­ploy­ment fall­ing for 19 con­sec­u­tive months.

There has also been lit­tle to no jobs growth across the State while wages are barely keep­ing pace with low in­fla­tion.

Mr Kent said the fall in the price of key com­modi­ties cou­pled with the end of the con­struc­tion boom was al­ways go­ing to con­trib­ute to a slow­down in wages growth.

But the slow­down had been more ex­ten­sive than ex­pected, par­tic­u­larly in WA and Queens­land.

“Some de­cline in wage growth in re­sponse to the de­cline in min­ing in­vest­ment and the terms of trade was to be ex­pected, but the de­cline in wage growth has been greater than im­plied by his­tor­i­cal re­la­tion­ships with the un­em­ploy­ment rate,” Mr Kent said.

He said the big­ger-than-ex­pected fall in wages growth could be down to sev­eral fac­tors.

These in­cluded min­ing work­ers be­ing forced into low­er­pay­ing jobs out­side the re­sources sec­tor and flex­i­bil­ity in the labour mar­ket, which has en­abled com­pa­nies to cut wages.

“Work­ers may be less cer­tain of their em­ploy­ment prospects, pos­si­bly be­cause of ris­ing com­pet­i­tive pres­sures in a more glob­alised world, lead­ing them to be more will­ing to ac­cept lower wage out­comes in ex­change for more job se­cu­rity,” he said.

Mr Kent said while wages growth had slowed there were some signs the bot­tom had been reached.

This had co­in­cided with a sta­bil­i­sa­tion in com­mod­ity prices.

“If com­mod­ity prices were to sta­bilise around cur­rent lev­els, that would be a marked change from re­cent years. The end of the fall in min­ing in­vest­ment is com­ing into view,” he said. “The abate­ment of those two sub­stan­tial head­winds sug­gests that there is a rea­son­able prospect of sus­tain­ing growth in eco­nomic ac­tiv­ity, which would sup­port a fur­ther grad­ual de­cline in the un­em­ploy­ment rate.”

Pic­ture: Tom Zaun­mayr

A view of Mount Tom Price mine. The RBA says the end of the min­ing bust is close.

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