Labour shortage, wages key pressures

LABOUR market pressures remain high in the Western Australian economy, with the skills shortage continuing to hit hard and the wage price index running ahead of the rest of the country.

The state's unemployment rate sits at 3 per cent, lower than the national rate of 4.3 per cent.

The rising number of 457 visas granted during the past year, up 41 per cent to 11,800, is a reflection that the lack of locally sourced workers is still an issue for WA businesses.

Wages continue to rise, with the wage price index in WA up by 1.4 per cent over the September quarter and by 5.6 per cent over the year to June 2008.

Growth in WA's WPI has now been running ahead of the rest of the country for three and a half years.

Wage price index growth was strongest in the mining (9 per cent), construction (7.8 per cent) and manufacturing (5.7 per cent) industries, while the government administration and defence (2.7 per cent) and hospitality (2.9 per cent) industries both showed the least growth.

WA wage growth has been higher in the private than the public sector in every quarter since December 2004.

WA's private sector WPI rose by 6.2 per cent, while the public sector index rose by 3.6 per cent.

The strong wages growth in WA over recent years has been due to the state's strong economy and tight labour market, particularly in the resources, construction and property services industries, which have been growing strongly due to the resources and property booms.

These factors have been features of the WA economy for some time, but it is only in recent quarters that annual wages growth has begun to accelerate.