Today the Reserve Bank has shone a spotlight on stagnant wages growth. Some say this is one of the Morrison Government’s biggest economic failures.
The warning comes as Australians head into Christmas too many are burdened by stagnant wages, skyrocketing bills and record debt.
The RBA’s final Board Minutes of the year should send a powerful warning to the Morrison Government that persistent weakness in wages growth remains a major threat to an already weak economy.
According to the latest RBA Board Minutes:
“Growth in household disposable income had been weak over recent years, in both nominal and real terms “Households’ expectations about future economic conditions had declined significantly since June.
Members noted that the prolonged period of slow income growth had affected both consumer sentiment and growth in household consumption.”
Private sector wages growth had “levelled out in recent quarters and public sector wages growth slowed in the September quarter”.
“Members noted that weak growth in household income continued to present a downside risk to consumer spending, and that a low appetite for risk could be constraining businesses willingness to invest.
“The current rate of wages growth was not consistent with… consumption growth returning to trend.”
“The persistently low growth in household incomes continued to be a source of concern for the consumption outlook.
These comments echo the Reserve Bank’s recent comments that weak wages growth is the new normal”.
Today’s observations are nothing new to ordinary Australians who already feel that no matter how hard they work they just can’t seem to get ahead.
Labor says Scott Morrison and Josh Frydenberg have failed the basic test of coming up with a comprehensive plan to get the economy moving again.