The labour cost index suggests that the recession is not having an impact on curtailing pay increases, with the LCI up 3.3 percent on the previous year; up 0.6 percent on the previous quarter.

On the quarter, the increases were the same for both the public and private sectors (0.6 percent), while on the year, public sector salaries were up 4.3 percent vs. 3.0 percent for the private sector.

A key factor behind the increases was collective employment agreements coming into effect.  The education industry saw an increase of 5.7 percent on the year, while health and community services salaries increased by 4.4 percent.  Similarly, by occupation, teaching professionals' salaries were up 5.9 percent, while health professionals' salaries were up 5.1 percent.

Another argument for salaries remaining high could be the number of people staying in their jobs rather than moving on.  This sees a number of industries paying higher salaries as they have an increasing proportion of longer serving, higher paid staff on their books.  (I heard this case made in relation to the police force and it appears to make sense to me).

However, the increases appear to be trending back down in the last two quarters (March 09 and December 08) when comparing to the same quarter of the previous year.  After increases across most quarters since March 2002, this would suggest that there has been some restraint in salary increases.