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Stephen Koukoulas - Where To For Wages?
BY STEPHEN KOUKOULAS - 15/05/2017 | VIEW MORE ARTICLES BY ALAN KOHLER

One reason for the low inflation and moderate growth trends in the economy has been the sharp downturn in wages growth. Overall, annual wages growth has dropped from around 4 per cent just under a decade ago to a record low 1.9 per cent. Private sector wages growth has registered a more severe weakening than public sector wages, in part due to the rapid casualisation of work in the private sector.

Weak wages growth erodes the purchasing power of consumers, meaning sluggish growth in retail spending (retail sales data this week confirmed the weakness in this sector) which feeds into softness in the overall economy and a bias higher in the unemployment rate. With unemployment creeping up and underemployment at record highs, a near term pick up in wages growth seems unlikely.

 



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