The public sector marked its first single-digit annual wage growth since September 2015, at 8.7% year-on-year, with public health posting an unexpected -2.1% month-on-month drop (+5.8% YoY), the largest since mid-2010.
A substantial wage increase in public health is scheduled for March, though this might be offset by capping some benefits which makes it a bit difficult to assess the overall impact. The public administration sector continues to receive special government attention, posting a 15.6% YoY growth, while the public education grew 5.5% YoY.
Public sector comes back down
On the private sector side, we have a solid 12%YoY growth, though the data has been somewhat distorted by the transfer of social contributions from the employer to the employees and the frontloading of bonuses and other one-off payments in January 2017.
The construction sector is leading the way growing by 20.1% YoY, the largest growth post-GFC, suggesting that private investments are holding strong, compensating to some extent the lack of public investment spending which ended 2017 at an all-time low. Industry and manufacturing are broadly in line with their sector’s 12-month moving average, at 11.4% and 12.2%YoY.
Inflation eroding most of the wage increase
After discounting for February inflation which printed 4.7%, the overall picture looks less rosy, resulting in a real average wage increase of only 4%YoY for the public sector and 7.3% for the private sector.
On a more optimistic note, the CPI might have already peaked in February, though we still expect it to stay above 4% for most of this year. This could keep real wage increases in single digits in 2018.