Annual wage growth firmed to 2.1 from 2.0 percent, but was only just above the all-time trough of 1.9 percent and barely ahead of consumer price inflation. Even that owed much to an unusually generous 3.3 percent hike in the minimum wage which was forced on reluctant employers by the government regulator. The snail-paced uptick in wages means debt-laden households will continue to curtail retail spending. That further threatens to weigh on inflation which has lurked below the Reserve Bank of Australia's (RBA) 2-3 percent target for more than two years.
"We suspect that wage growth will creep ever so gradually higher as the unemployment rate edges lower and spare capacity is used up," said Paul Dales, Sydney-based chief economist at Capital Economics. "Wage growth is unlikely to significantly boost household income growth or underlying inflation this year at least. Until that changes, the RBA isn't going to raise interest rates." Australia has seen an employment boom since early last year, but that has failed to push the jobless rate much lower or lift pay rewards for workers.
In an unwelcome trend, recent wage deals across sectors, known as enterprise agreements, paid smaller increases than the ones they replaced. Wednesday's data showed annual wage growth in the private sector stayed stuck at 1.9 percent with not a single industry paying more than 2.6 percent. The best outcomes came in healthcare and recreation, with mining wages up just 1.4 percent - barely recognisable from former boom times.