Minutes: View On Faster Wages Growth Affirmed

"Other information received in June had affirmed the outlook for faster wages growth in the period ahead. The Fair Work Commission had announced a 5.2 per cent increase to the national minimum wage. An increase in modern award wages of between 4.6 per cent and 5.2 per cent had also been announced, with lower-paid workers set to receive increases at the upper end of this range. These increases in the national minimum wage and modern award wages were the largest since 2006, reflecting the Fair Work Commission's desire to support real wages for low-paid workers during a period of higher inflation. Separately, the New South Wales and Tasmanian governments had announced increases in their wage caps for public sector workers, while the Queensland Government had removed its wage cap. Members noted that this would support aggregate wages growth in the period ahead, given state governments are large employers. Further, around 60 per cent of private sector firms in the Bank's liaison program had reported that they expect wages growth to pick up over the coming year. Some contacts had highlighted the increase in inflation and the recent Fair Work Commission decision as relevant considerations in this assessment, as well as the need to respond to higher rates of voluntary turnover. Notwithstanding this more recent information, members observed that the Wage Price Index had increased by only 2.4 per cent over the year to the March quarter."