This made conditions in non-resource firms in the traded sector more difficult, and growth in investment, output, employment and wages was weak in those parts of the economy. Meanwhile, resource firms were benefitting from sharp rises in the prices of their outputs and had high expectations of future profits from the new infrastructure they were building.
As such, they were willing to pay higher wages and absorb the freed up labour from the weaker sectors. 3  The key point was that the adjustment in the boom years was achieved with a balance of a rise in wages in Australian dollar terms and a nominal exchange rate appreciation that pushed up wages in foreign currency terms.