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Wage freeze is thawing but the pace is glacial

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From Monday, more than 2.2 million people working on award wages will get a 3 per cent pay rise, a change that will also influence the pay of hundreds of thousands of other workers in the longer-term.

Although it's hardly huge, the rise follows a 3.5 per cent increase last year and a 3.3 increase in 2017. It's roughly double the rate of inflation.


But as you can probably guess, it won't be nearly enough to deal with our economy's low wage growth problem, even if it helps a bit. Why not?

The simple answer is that most workers aren't on award wages, but that's only part of the story. A much more sophisticated account of what's going on with wages is set out in a recent article by James Bishop and Natasha Cassidy in an article in last week's Reserve Bank Bulletin.

It shows that although award wages have been rising in the last few years, there are plenty of other people who have copped pay freezes. It's only recently that these appear to be thawing.

We often generalise about wages across the whole workforce, but the RBA researchers looked at differences in wage growth according to the various methods of setting pay (excluding people who are self-employed or contractors).

Wage growth is starting to pick up as previous pay freezes come to an end, and the labour market tightens.Credit:

The award wages being lifted on Monday are a type of........

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