In 2015, Australia recorded its weakest rate of wage growth since the current wage index came into play back in 1998.
The Australian Bureau of Statistics said on February 24th that the seasonally-adjusted wage price index rose a mere 0.5 per cent in the last quarter of 2015 to reach an annual rate of 2.2 per cent.
With companies cost cutting, low inflation and figures showing earlier this month that unemployment rose to 6 per cent the highest since September 2015 helping slowing the pace on demands on increasing employees pay.
Shane Oliver, head of investment strategy and chief economist at AMP Capital based in Sydney stated “On the one hand it’s a drag for household income growth and hence consumer spending but on the other it’s helping limit the upwards pressure on unemployment and helping to further improve the competitiveness of the Australian economy. It also means that there is no inflationary pressure coming from wages.”
We have seen growth slowdown in recent times after years of growth due to the mining sector which has now had to scale back its operations and cut cost of production to deal with the decline in commodity prices.
Shane Oliver also commented that “Business investment is likely to remain negative as the unwind of the mining investment boom continues to weigh,”
To help counter this issue the RBA – Reserve Bank of Australia has kept interest rates a record low which is helping increase the housing and construction industries.
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