Despite these setbacks over the years, the central bank continues to reiterate that improvement in the economy and labour market should see a lift in wages growth over time, although they do underline that they expect it to be a gradual process.
Economists in Australia have put the country’s prolonged period of slow wage growth down to a mix of macroeconomic factors, such as technological change, globalisation, and bargaining power changes.
The ABS’s Wage Price Index for the December quarter revealed no change to the country’s seasonally-adjusted annual wage growth rate, remaining at the three-year-high level of 2.3% from the September 2018 quarter.
The new data comes as a disappointment, with the December quarter wage growth of 0.5% undershooting market forecasts of 0.6%.
But in some good news,
Annual public sector (government) wage growth remained higher at 2.5%.
At the state and territory level, these were the annual wage growth rates (in original, non-seasonally adjusted figures):
- NSW: 2.4%
- VIC: 2.7%
- QLD: 2.3%
- WA: 1.6%
- SA: 2.3%
- TAS: 2.6%
- ACT: 2.0%
- NT: 2.2%
The recent rise in the minimum wage and a stronger labour market are considered the main factors that accelerated wage growth over 2018.
Economists, the RBA, the Government and, most importantly, workers will hope to see it accelerate further over the next few months, with the next figures due to be released in mid-May this year.
In the past, RBA Governor Philip Lowe has said Australia’s annual wage growth would need to rise to around 3.5% for the central bank to keep annual inflation up within its 2-3% target band.
But for quite some time, the RBA has been forecasting a rise in wages growth without it coming to fruition.
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