Many Australian companies unwilling to increase wages
Companies in Australia appear unwilling to lift wages despite growing labour shortages and the tightening of the jobs market, according to the Reserve Bank of Australia’s (RBA).
In its June board meeting minutes, RBA noted, “The strong focus on cost containment by businesses meant that it would take some time for spare capacity to be reduced and the labour market to be tight enough to generate wage increases consistent with achieving the inflation target.”
In place of higher wages, companies are instead offering one-off bonuses and flexible working arrangements, it said.
The RBA is aiming for wage growth to be above 3%, and inflation between 2% and 3% before normalising monetary policy and lifting interest rates.
Members of the RBA noted that there is still spare capacity in the jobs market, with a high number of people outside the labour force who are open to work.
“This suggested there was still a pool of workers available to firms should the demand for labour continue to increase,” RBA highlighted.
“While a faster pick-up in wages growth was possible, members continued to expect a gradual increase in the following few years, as spare capacity in the labour market was steadily absorbed,” it added.