‘Great reshuffle’ drives wage growth – but not for all

If you want a pay rise, switch jobs. This advice was recently endorsed by Federal Treasurer Josh Frydenberg in a speech to the Australian Industry group. In the same speech he questioned the myth of the “great resignation”, suggesting instead we are seeing a “great reshuffle”.

The treasury research from 2019 suggests that overall wages grow about 0.5 per cent for every 1 per cent increase in job switches across the labour market as a whole. Australian Bureau of Statistics data for the year since 19th December 2020 show people in payroll jobs increased 3.2 per cent.

However, the increases were not evenly spread. Those at each end of the labour market showed the biggest increases, with 15-19-year-olds up 8.6 per cent and those in their 60s up 5.4 per cent, but outdone by the over-70s at 7.2 per cent. The growth figures were far less impressive for those between 30 and 60, and ranged between 1.9 and 2.6 per cent.

Total wages also showed an increase over this period, up 9 per cent overall (which, when compared to property price increases, shows they are not keeping up). However, a similar pattern of increases emerges – the 15-19-year-olds showing an impressive 16.4 per cent increase, followed by those at the other end of the age spectrum, with the over 60s being the only other group to enjoy double-digit increases (10.2 per cent for the 60s, and 11 percent for the over-70s).

So, there does seem to be, at the labour market level, some evidence that where there is the most growth in jobs there are the greatest pay increases. However, that is not so easy to translate into individual advice about pay and advancement because the data also shows, even at the macro level, large variations as a result of other factors.

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Unsurprisingly, there are large variations in changes in overall payroll jobs by industry – from a decline of 6 per cent in accommodation and food services, to an increase of 6.7 per cent in mining. Similarly, changes in total wages varied widely across industries, with accommodation and food stagnant at zero percent, but lucky financiers and insurers jumped 21.4 per cent.

All of these variations should make us pause to consider our individual circumstances. It is no surprise that those least likely to be encumbered with large debt (the youngest and oldest in the labour market) are freer to move around than those in the mortgage middle moored to children.

And maybe not moving for work might also be attractive and lead to higher wages. We are currently seeing a push by some employers and politicians once again to “get people back into the office” – usually based on zen-like magical thinking of the benefits while forgetting the significant costs of commuting and also many workers’ new-found enjoyment of working from home at least some of the time.

Maybe factoring that benefit into the equation will see people shuffling in their slippers to employers offering flexible working practices.

Jim Bright, FAPS is Professor of Career Education and Development at ACU and owns Bright and Associates, a career management consultancy. Email to [email protected]. Follow him on Twitter @DrJimBright