The previous post talked about unemployment being at a ten year high, and this should give us a clue to the wages data. When unemployment is high employers are under less pressure to grant wage rises because people might prefer to keep their jobs than force the issue and find themselves unemployed.
A.W. Phillips first identified this wage rise/unemployment link in 1960, using data from nearly one hundred years. There was a clear trade off between unemployment and wage rises.
The diagram shows the data up to 1913, the data from 1919 to 1957 looked identical.
The link between wage rises and inflation was soon established and often the Phillips Curve is shown as a relationship between inflation and unemployment (a point not made by Phillips himself). So one good piece of news is that Australian inflation might be expected to moderate in the next six months. However the price is higher unemployment and some will feel that inflation is the lesser of two evils.
The article also suggests that Australians are going to experience lower incomes as wages rise less quickly than inflation. This is probably inevitable as the Australian dollar falls in value causing imports to be more expensive. Also it is part of the essential readjustment of wages to allow Australia to be competitive in the world market.
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