Australia is seeing an increase in job vacancies, but workers are still unlikely to receive any significant bump in their pay despite having more opportunities in the job market, according to new analysis.
In February, a total of 423,500 jobs were available while some 563,300 workers were on the hunt, the lowest in 13 years, based on figures from the Australian Bureau of Statistics.
"What this means is that, in February 2022, there were only 1.3 unemployed people chasing each vacant job, the smallest ratio on record — down from three unemployed people for each vacancy in 2020, five for each vacancy in 2000, and seven in 1990," said David Peetz, Professor Emeritus, Griffith Business School, Griffith University, in an article published in The Conversation.
The jobless rate, already at 4%, is predicted to fall further to 3.75%, hitting a five-decade low. Wage growth, however, is only at 2.3%.
"The low wage growth, compared with unusually high price growth, means wage growth has slipped 1.2% below price growth over the past year. That means what Australians are earning isn’t keeping up with rising prices," Peetz said. "If price growth merely stays at its current level of 3.5%, the budget’s forecast of 3.25% wage growth means real wages will fall."
With a lower ratio between the unemployed and available jobs, employers should therefore consider offering higher wages in a bid to fill these open positions. Otherwise, employers who pay low wages can expect to "pay the price with higher staff turnover, unfilled vacancies, absenteeism or poor product quality," Peetz said.
"But [employers] still feel they can get away with paying low wages, and leaving many vacancies unfilled. And other employers feel they are forced to keep wages low, due to competing against low-price firms and because their immediate customers (such as supermarkets) insist on low prices," he said.
These employers are able to choose to pay lower wages than in the past because workers are less powerful and their collective bargaining power is less effective than it once was.
Workers are also contending with other factors such as casual employment, contracting, labour hire, franchising or underemployment. Meanwhile, industrial disputes are purportedly at "record lows partly because industrial laws have changed," so unions are now finding it harder to demand better wages.
"Don’t expect any surges in real wages, no matter how tight the labour market is, while this new structure remains," Peetz said.