Companies faced with skilled labour shortages are not giving wage increases but are instead offering one-off bonuses or more flexible work arrangements, the Reserve Bank of Australia (RBA) said.
In the June policy meeting minutes, the RBA said some companies were also choosing to “ration output” rather than pay higher wages to attract new workers.
“The reduction in access to foreign labour and reduced interstate mobility were cited by some firms as contributing factors,” the Bank said.
The RBA has been holding its official interest rate at a record low of 0.1 percent since November 2020. The board stated that it would not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range and wages growth above 3 percent.
Members of the board noted that inflation was expected to rise temporarily during the middle of the year due to price pressures from supply bottlenecks and higher commodity prices.
“However, in most advanced economies, including Australia, spare capacity in labour markets is likely to contain underlying inflationary pressures for some time,” they said.
Shelley Robertson, the executive general manager of an iron ore mining company Mineral Resources, said that the lack of access to skilled labour was becoming an issue for the industry.
“We are seeing skills shortages right across the chain from trainees through to professionals,” Robertson told the APPEA conference, as reported by The Australian.
Commonwealth Bank chief economist Stephen Halmarick said in an online conference that wages were usually “the last thing to move”, and other factors were pushing up prices and inflation.
“Everywhere I go, no matter which industry I speak to, people are complaining or pointing out to me that there’s a shortage of skilled labour. Trying to get enough people for the jobs available is difficult,” Halmarick told the Committee for Economic Development of Australia.
“But there are other costs out there that are rising; logistics, supply chain, insurance,” he said. “Costs are increasing; commodity prices are increasing. So there could be other sources of inflation other than just wages growth.”
Consequently, Halmarick said his bank forecasted that wages growth and inflation would recover earlier than what the RBA thinks.