Low wage growth set to become "new normal" for workers: Reserve Bank of Australia

Source: Xinhua| 2019-11-26 11:10:27|Editor: Xiaoxia
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SYDNEY, Nov. 26 (Xinhua) -- Although the number of newly-created jobs is surging Down Under, the Reserve Bank of Australia (RBA) has warned that low wage growth is set to become the "new normal" for workers.

According to Deputy Governor Guy Debelle on Tuesday, the share of the Australian population employed is edging towards an all-time high.

But while this might be a good outcome, he explained that it has not actually led to a decline in the unemployment rate, as greater numbers of woman and older Australians are continuing to enter and re-enter the workforce.

"The unemployment rate has turned out to be very close to what we had expected and has moved sideways around 5.25 percent for some time now," he said in a speech at the Australian Council of Social Service National Conference in Canberra.

"The surprising strength in labor supply has been one of the factors that has contributed to wages growth being slower than we had expected."

"But at the same time, the lower growth in wages has probably contributed to the strength in employment growth."

Predicting wage growth to remain somewhere around 2.0 percent for the foreseeable future, the RBA set interest rates at the record low of just 0.75 percent in October, hoping to spark an uptick in the local economy.

"Wage growth has declined noticeably since around 2012," Debelle said.

"As wages growth has fallen, the distribution of wages growth has also become increasingly compressed."

"This fall in the dispersion in wages growth across jobs mainly reflects a sharp fall in the share of jobs receiving 'large' wage rises."

"There is growing evidence to suggest that wage adjustments of 2 point something percent have now become the norm in Australia, rather than the 3-4 percent wage increases that were the norm prior to 2012," he added.