As noted earlier, figures released today by the ABS revealed that Australian wages growth fell to the slowest pace on record (1997) in the March quarter, clocking it at only 2.3% (seasonally-adjusted and trend) over the year:
The news was also bad when adjusted for underlying inflation, with annual wages growth falling to -0.1% in the year to March in trend terms:
The unpleasant reality is that real wages will need to continue stagnating (or fall) for Australia to regain its competitiveness (although labour costs are by no means the only factor). Without such an adjustment, trade-exposed local firms could continue to shutter, slashing employment.
With commodity prices and the terms-of-trade likely to continue falling, and the epic unwind of mining investment and the shuttering of the local car industry still to come, the downward pressure on wages will very likely continue.