According to a note by Westpac senior economist, Justin Smirk
Last week, we saw the release of Q4 wage price data here and these were some of the responses to the data on that day. Some analysts are arguing that wage growth have bottomed and may start to reverse its course, while others are saying that the lackadaisical growth is going to be a persistent one for the next few years.
And Smirk is on the latter's side of that. "Wage inflation may have found a base but there is very little to get excited about", he says.
He argues that the only real sign of any lift in wages is coming from the public sector - pointing out that private sector wage growth was +1.9% y/y, sitting close to the record low of +1.8% y/y and running well below the +3.0% y/y ten-year average.
The note also mentions that "wage growth remains quite weak and remarkably so across industries, sectors and states", highlighting that only 2/18 industries tracked by the ABS had annual wage growth exceeding 2.5% in the Q4 report.
Regarding the relationship between Australia's falling unemployment rate with private wage growth pressures, Smirk says that the "relationship has shifted significantly over the last few years and is less reliable" - suggesting that the muted reaction in wages to falling unemployment rate figures could be because there is more slack in the labour market than that indicated by the data alone.
The note goes further into detailing that and enterprise bargaining agreements, but the main point remains that at the moment it's difficult to see growing wage pressures any time soon in the Australian economy. And that is an ongoing problem for the RBA, and has been for some time now.