Should the RBA stifle the recovery with fast rate rises, workers’ real incomes will continue to fall
This does not mean businesses are now making huge profits – there are many costs other than labour that need to be paid – but that clearly the big drivers of inflation are not coming from labour costs.
The labour account figures, unlike the monthly labour force data, enable us to see just how many vacancies there are in each industry relative to the total number of jobs.Right now 2.8% of all jobs are vacant waiting for someone to fill them. That is the highest level on record back to 1994 by some margin:
You would expect this great need for labour would see a similarly large increase in the payment to workers – the usual supply and demand relationship. That labour costs would soar, perhaps justifying the need to keep the minimum wage rise down to protect businesses, given how many workers in the sector earn that rate.The real hourly cost of labour in the hospitality sector is now back where it was in 2012 – a period when the industry vacancy rate was less than half what it is now.