As in many other countries, wage growth in Australia has been quite subdued and lower than would be suggested by most of our standard models. The latest reading of the wage price index shows an annual increase of 2½ per cent and the earnings per hour measure from the national accounts is lower still (Graph 12).
This low level of wage growth is contributing to quite low rates of inflation in a range of service industries. Increased job uncertainty is likely to be one of the factors here, with consumer surveys showing high levels of concern about future unemployment.