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Public Sector Wages Breakout

Average Weekly Earnings data was released today by the ABS. It shows annual wages increase of 5.7% for the public sector versus 2.1% in the private sector. This is a big differential at 3.6%. Given a tight labour market and shortage of skills in the profitable resource industry boom states of Queensland and WA, the pressure on private sector wage inflation must be increasing.

It's shades of the early 1970's when Australian public sector pay got out of control and an oil price surge sent world inflation into a tailspin. Conventional Household savings are at a low ebb. The Reserve Bank is studying how the consumer economy might work where savings are represented by an increase in house prices and equity portfolios rather than money in the bank. See their recent study at http://www.rba.gov.au/PublicationsAndResearch/RDP/RDP2006-07.html

Posted Thursday, 17 August 2006


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