New data confirms an old adage — the best way to get a big pay rise is probably to go and find a new job.
Figures from Australia's biggest job marketplace, Seek, which currently hosts more than 200,000 job ads a month, show advertised salaries rose 4.1 per cent over the year to July.
Pay rates on offer for jobs on the platform rose 0.4 per cent in July, a similar rate to the previous two months, putting annualised wages growth at a rate just below 5 per cent.
That is much stronger than the official Wage Price Index from the Australian Bureau of Statistics, which showed annual wages growth of just 2.6 per cent over the year to June.
Seek's senior economist Matt Cowgill said it is not surprising that advertised pay rates are growing faster than those of people staying in the same job.
"I'd expect to see advertised salaries respond more and quicker to changes in economic conditions and broader changes in the labour market," he told ABC News.
"When things turn down, as they did during 2020, [employers are] not going to cut pay for their existing staff but they might be much more willing and able to cut, or at least restrain, the growth in the pay they're offering to new hires. And that's what we saw in our data.
"And, similarly, as the labour market recovered, and as things started to boom through 2021, advertised salary growth did pick up much further and quicker than then overall wages and salaries as measured by the ABS."
Mr Cowgill said there is no guarantee that the growth in advertised salaries will eventually be matched by wage growth for all workers, but it is a positive sign.
"The pick-up in advertised salary growth that we've seen does cause me to expect that the wage price index will continue to pick up," he said.
Other new economic research casts doubt on how much pay rises for those changing jobs will raise wage levels overall.
The paper, by newly formed economic think tank e61, found that the rate of job switching in the economy each year had declined noticeably.
"The probability that the average Australian worker switches jobs (or 'job-to-job transition rate') has fallen from 11.3 per cent in the mid-2000s to 8.5 per cent more recently," the research observed.
"The job-to-job transition rate has increased during the recent labour market recovery but remains well below the average rates observed prior to the GFC [global financial crisis]."
This decline is not only holding back wages growth directly, because people who switch jobs tend to receive bigger pay rises, but also productivity growth across the economy that could contribute to higher wages.
"The propensity for labour to be reallocated to more productive firms has fallen," e61's researchers noted.
"This decline in productivity-enhancing reallocation can account for one-quarter of Australia's productivity slowdown."
Young Australians left worse-off
Moreover, the decline in job switching is particularly harmful to young workers.
"The pay increase from switching jobs is particularly important to young workers given their greater need to sort into well-matched jobs in the formative years of their careers," e61 argued.
"Crucially, disadvantaged young workers tend to experience larger wage gains from switching jobs than those that are not disadvantaged.
"This may be due to disadvantaged workers lacking the networks to place them in lucrative and well-matched roles from the outset."
The think tank attributes much of the fall in job shifting to a decline in competitiveness and vitality of corporate Australia.
"Firm entry rates have declined from 13 per cent in the mid-2000s to 11 per cent in the mid-2010s, while the employment share of young firms has declined from 11 per cent to 8 per cent over the same period – a pattern that is broad-based across industries," the e61 report observed.
"These changes are significant given that young firms are often more innovative and can place pressure on incumbent firms to improve.
"Young workers are particularly affected by the decline in firm entry, as young firms have a greater concentration of young employees within their staff."
This has resulted in young Australians bearing the brunt of a decline in the share of national income going to wages.
"The decline in the labour share of income over the past two decades is fully concentrated among young workers," the e61 report said.
Growth in profits share debated
Business groups have disputed the existence of a widespread trend towards profits growing ahead of wages.
Analysis by the AiGroup attributes almost all of the decline in the labour share of national income over the past couple of decades to just two industries, mining and finance.
"For the remaining 82 per cent of the economy there has been no fall in the labour share of income," the group's chief policy advisor Peter Burn argued.
"The fall in the labour share of market sector income does not therefore support the proposition that businesses in general have access to a greater share of industry income from which they can pay higher wages."
Ai Group has published a separate paper to refute the ACTU's argument that businesses have captured most of the productivity gains made in Australia.
Mr Burn said those claims are based on labour productivity and thus do not account for the contribution of business investments in new machinery and technology that have generated much of the recent productivity growth and for which, he argued, business deserves to enjoy the returns.
"Despite its name, 'labour productivity' over the past couple of decades was overwhelmingly driven by the increase in mining investment," he said.
"It is no surprise therefore that wages growth and changes in labour productivity were out of kilter in this period.
"In contrast, the multifactor productivity measure, which corrects for the increase in the quantity of capital employed in production, results in a much more rigorous, and in this case, much lower measure of productivity improvement."
However, the paper from e61 finds that it is not just the mining industry where productivity gains seem to have accrued more to business profits than workers' pay packets.
"The estimated degree of pass-through from productivity to wages has declined by almost 25 per cent over the past 15 years," e61 found.
"For example, a 1 per cent increase in turnover per worker was associated with a 0.19 per cent increase in average wages in the mid-2000s.
"But the degree of pass-through to wages fell to 0.14 per cent by 2020.
"The decline in pass-through has occurred across all industries but is most striking in the accommodation and food services industry where the degree of pass-through declined from 0.31 to 0.20 per cent."
Which industries are seeing the biggest pay rises?
It perhaps comes as little surprise that design and architecture, information and communication technology, and trades and services have seen the biggest advertised pay rises over the past year.
They were the only three sectors where pay rises matched or bettered the inflation rate of 6.1 per cent.
Science and technology was the weakest sector, with pay for advertised jobs up just 0.6 per cent, while government, education and training, community services and legal positions all saw increases of less than 2 per cent.
"There's just a lot more inertia when it comes to wages and salaries in the public sector, and what I mean by that is just that the growth rate tends to defer less and kind of move a bit slower in both directions," said Mr Cowgill.
"Partly reflecting the fact that wages and salaries are typically set by enterprise agreements, which are only renegotiated every few years."
However, in all but those highest paying sectors, wages growth is still short of inflation, even for workers shifting employers to get a better pay rise.
Seek's figures also seem to indicate the jobs market may be nearing its peak with the level of wages growth levelling off, albeit at just under 5 per cent a year.
"In recent months, we have seen a kind of plateau in that monthly growth rate," Mr Cowgill observed.
"We have also seen that in our job ad numbers as well. So small falls in June and July in job ad volumes, but broadly speaking kind of plateauing at a very high level."
