Today the Department of Employment and Workplace Relations revealed yet more evidence that there is no sign of a wages breakout in the the Australian labour market.

The most recent “trend in enterprise agreements” figures showed that in the December quarter of 2023 the average annual wage growth of the 1,274 agreements covering just over 211,000 employees was 3.8% – down from 4.0% in the September quarter, and even below the 3.9% average annual wage growth for agreements approved in the March and June quarters of last year.

This demonstrates yet again that there is no wage-price spiral but more accurately that workers are struggling to recover the lost value of their wages over the past 3 years.

There was better news for public sector workers. The overall average wage growth increase for public sector workers was 5.2%. This is actually the highest quarter since the March 2004 quarter. But whereas in 2004 the average was across 93 enterprise agreements, here it was for just 40. Indeed the 5.2% is driven overwhelming by an average 5.4% wage increase the education sector. It is also worth noting that the average annual wage growth for all current enterprise agreements for public-sector workers is just 3.0%.

The slowing of wage growth in the private-sector, however, reflects the difficulties for workers negotiating better pay and conditions even in circumstances where the real value of wages have been eroded.

The figures highlight that the Reserve Bank’s concerns over excess demand powering higher wages have been grossly misplaced. Wages remain at levels consistent with long-term inflationary targets and concerns should be more directed at ensuring workers are able to regain the lost value of their wages without fear that above inflation age growth will be met with higher interest rates.