In yesterday’s Monetary Policy Decision, RBA governor Phil Lowe again reiterated the Bank’s central goal of driving unemployment and underemployment down and wage growth up. Lowe also explicitly stated that Australia’s closed international border to immigration has played an important role in tightening the labour market:
The Australian economy is on a positive path. Output is now above its pre-pandemic level and more Australians have a job than they did before the pandemic. The unemployment rate has returned to its pre-pandemic level, underemployment has declined and job vacancies are at a high level…
Both aggregate wage growth and underlying inflation remain subdued and we expect this to remain the case for some time yet. One issue we are watching carefully, though, is how the balance of supply and demand in the labour market is being affected by the closure of our international borders. There have been increased reports of labour shortages in parts of the country and a step-up in wage increases for some occupations. Even so, wage increases for most Australians are still modest and the expected pick-up in overall wages growth is still forecast to be only gradual.
