RBA tips wage hike

THE Reserve Bank of Australia says it expects wage growth to eventually pick up even though companies are reluctant to raise salaries for fear of becoming uncompetitive.

Employers have cut costs in the face of strong competition, but early signs of labour shortages and an inability to further trim margins mean they will eventually have to raise prices and wages, according to RBA assistant governor Luci Ellis.

In a speech delivered yesterday to an economics conference in Sydney, Dr Ellis said existing enterprise agreements would likely create a lag between labour shortages and wage rises to attract skilled staff.

But companies would eventually have to move on remuneration, Dr Ellis said.

“Despite firms’ reluctance to raise prices, margins cannot be squeezed forever,” Dr Ellis said.

“Higher costs will, therefore, boost price inflation over time.”