Money RBA's Ellis tips wages to grow, eventually

12:31  13 february  2018
12:31  13 february  2018 Source:   msn.com

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The RBA estimate that the tipping point is when we have unemployment of about 5 per cent. But that’s the RBA ’ s central unemployment forecast for 2020 and it is above the NAIRU. Ms Ellis said in her speech that wage growth will rise, “but not immediately”.

February 21, 2018. RBA ’ s Ellis tips wages to grow , eventually . Business Finance. February 14, 2018. RBA boss confident of growth pick-up. Finance.

Dr Luci Ellis.© AAP Image Dr Luci Ellis. The Reserve Bank expects wage growth to pick up eventually even though companies are currently 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 that they will eventually have to raise prices and wages, RBA assistant governor Luci Ellis said in a speech on Tuesday.

Dr Ellis said current enterprise agreements would likely create a lag between labour shortages and wage rises to attract skilled staff, but that firms will eventually have to move on remuneration.

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Companies are reluctant to give pay rises to staff as they avoid raising their prices for fear of losing business, according to a senior Reserve Bank official.

RBA ' s Ellis Says Australian Wages Will Pick Up Only Gradually. (Bloomberg) -- Reserve Bank of Australia Assistant Governor Luci Ellis warned that wage growth could take longer to pick up even if the nation’s jobless rate hits the central bank’s estimated full employment level.

"Despite firms' reluctance to raise prices, margins cannot be squeezed forever," Dr Ellis told a conference in Sydney.

"Higher costs will, therefore, boost price inflation over time."

But heightened competition in retail - which has led to the demise of stores including Dick Smith, led to profit warnings from the likes of Myer, and created margin pressures at retailers including JB Hi-Fi - means there is still firm resistance to lifting wages.

"Foreign retailers have entered the local market in recent years and continue to do so," Dr Ellis said.

"This has also induced the existing players to reduce their costs to stay competitive, for example by improving inventory management."

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