Wages growth lower than expected nationally, despite reviews and minimum pay call

Wages growth lower than expected nationally, despite reviews and minimum pay call

This was up from 1.9 per cent in the past few quarters but was still lower than expected.

The prospect of low wages growth, and therefore low inflation, for a longer period weighs on the prospect of Australian interest rate rises, which has knocked the stuffing out of the Australian dollar.

However, the higher cost to employers of minimum wage earners has failed to deliver a meaningful boost in overall wage growth, which edged up by just 0.5 per cent in the September quarter.

Australian Bureau of Statistics chief economist Bruce Hockman described the September quarter increase as marginal.

While some commentary had forecast a substantial increase in wage growth, thanks to the July increase in minimum wages, only a slight uptick was recorded in the September quarter.

Ongoing very-low wage growth and its implications for both the consumption and inflation trajectory suggest that monetary policy is likely to remain stimulatory for some time.

"But there remains a high degree of slack in the labour market and that keep wage growth relatively low for the foreseeable future".

Both private and public sector wages rose 0.5 percent q/q. The retail sector, for example, saw wage growth slow from 1.8 percent y/y in Q2 to 1.6 percent in Q3.

In original terms, through the year wage growth to the September quarter 2017 ranged from 1.2 per cent for the Mining industry to 2.7 per cent for Health care and social assistance and Arts and recreation services.

"In the current environment, low wage growth points to weak inflation and makes it hard for the Reserve Bank to justify higher interest rates", he says.

"Stronger business conditions and lower unemployment should, in time, lead to higher wage growth."

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