«So I would like to see the system return to wage growth starting with a three.» Australian central bank boss Philip Lowe had already expressed this wish in August 2019. Now wage growth has arrived Down Under and is approaching the targeted 3-percent mark. Wages are also climbing in other regions of the world – in some places moderately and others more steeply. In the USA, the increase is around 6 percent. Is this too high and a risk for inflation? We would say yes if the wage growth were structural. However, we are of the opinion that this is merely a temporary flare-up. That's because:
- The increase in wages has so far been particularly pronounced in the USA. The reasons for this are that workers are reluctant to return to the labour market thanks to rising assets (on the stock exchange and in real estate) as well as generous state unemployment benefits. This has also led to the unemployment rate being pushed close to the pre-pandemic low (see the following chart). However, the two factors of «unemployment benefits» and «asset gains» naturally only have a temporary effect. Indeed, we expect more Americans to return to the labour market.
- Trade union bargaining power remains weak despite sporadic increases in minimum wages. Nonetheless, in the long term, the ageing of society will play into the hands of trade unions.
- The economic recovery after the pandemic is unique and will take some time to manage. The increased pent-up demand of consumers currently faces scarcities in production capacities in terms of personnel and raw materials. Demand cannot be completely satisfied in these circumstances.