The Prime Minister and Central Bank are confident of wages growth, despite mixed projections on other key business and economic indicators.
Speaking at a NSW Business Chamber function in Sydney, Prime Minister Scott Morrison was bullish on the state of the economy and business confidence.
Mr Morrison referenced Reserve Bank governor Philip Lowe’s statement this week, where he foreshadowed a probable wages rise and strengthening labour market.
The Prime Minister pinned the economic progress on small business, which represents the bulk of Australia’s employers. Approximately 781,908 businesses, or 36.8 per cent of Australian businesses, employ 19 or fewer people. Microbusinesses with one to four employees account for 584,744 of that total. The remaining 197,164 are businesses with five to 19 employees.
“Australians have worked very hard over the last decade,” Mr Morrison said.
“Because they have worked hard, we have seen 1.3 million jobs created. We have seen our AAA credit rating retained and strengthened.
“You did that. Small and family business did that… by taking a risk, by paying their employees first, and paying themselves last.”
However, Mr Lowe’s statement also pointed to “little further progress” in reducing unemployment in the last six months. This has remained broadly steady at about 5 per cent.
Further, inflation data for the March quarter were noticeably lower than expected, Mr Lowe said, contributing to the decision to keep the official cash rate on hold at 1.5 per cent, where it has remained since August 2016.
“The board judged that it was appropriate to hold the stance of policy unchanged at this meeting,” Mr Lowe said.
“In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the board will be paying close attention to developments in the labour market at its upcoming meetings.”