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RBA's Ellis Says Firms Reluctant To Raise Wages

Australian companies are reluctant to grant wage rises as this would increase prices of their products in the face of competitive landscape, Reserve Bank of Australia Assistant Governor Luci Ellis said Tuesday.

There are some signs of labor market tightening in the business surveys, suggesting that suitable labor is becoming increasingly difficult to find, Ellis said in Sydney.

She noted that so far, though, the response to that difficulty has not been to pay people more to ensure they stay, or poach them from elsewhere.

Instead, firms are increasingly using other creative ways to attract and keep staff without paying across-the-board wage rises, said Ellis. These include everything from hiring bonuses, to offering extra hours, to increasing perks and workplace conditions.

RBA expects wage growth to pick up from the current level, but not immediately and then only gradually.

The central bank last year estimated non-accelerating-inflation rate of unemployment at around 5 percent. "Since then we have not seen a reason to change that broad assessment," the banker said.

"But we are mindful that, as we approach that figure, there's a risk we find there is more room to come down before wage growth picks up in earnest," she added.

by RTT Staff Writer

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