Workers are unlikely to see a pay rise over the next two years, with the Reserve Bank downgrading its expectations for wages growth next year and warning the economy faces a “soft patch” due to the bushfires, drought and coronavirus outbreak.
In its statement on monetary policy released on Friday, the RBA maintained its forecast for wages growth of 2.3 per cent in the year to June 30, 2021. But it now expects a fall to 2.2 per cent in the 12 months to December 31, 2021, down from 2.3 per cent previously.
“Wages growth has been low and steady for some time, in line with the spare capacity still in the labour market, as well as the constraints implied by the wages policies of various governments,” the statement said. “As the unemployment rate declines and the labour market tightens, some limited upward pressure on wage outcomes can be expected.”
Growth in nominal household disposable income had been low for more than five years, the RBA added, noting subdued wages growth and weak growth in non-labour income were among the culprits.