From the AFR:
"[A]s economist Barry Hughes has argued, 4 per cent wages growth is uncomfortably high when labour productivity growth has slowed to an annual rate of about 1 per cent. Together they imply an annual increase in unit labour costs of about 3 per cent – 0.5 percentage points above the RBA’s effective inflation target. Hughes re-estimates the line in the sand – the wage growth consistent with stable profit margins – at about 3.5 per cent. According to the wage price index data, two-thirds of industries have now reached or gone beyond Hughes’s 3.5 per cent line in the sand. Hughes is sceptical about that, arguing that the advance in private-sector wage growth is on too wide a front for a system based on decentralised wage bargaining."
