It is a mystery that is confounding economists - why is wage growth at record lows when the economy is not all that far off full employment?
UBS chief economist George Tharenou has said the Phillips curve - an economic model that describes the inverse relationship between unemployment and wage inflation - is "close to broken".
Mr Tharenou said Australia had the necessary conditions to push wages higher, if the Phillips curve was anything to go by.
Jobs growth is booming at a post-GFC high and unemployment has dropped to a four-year low of 5.4 per cent.
And nominal gross domestic product is growing at 3.5 per cent, compared to its long-run average of 3.8 per cent, partly because of a renewed export boom driven by China.
But wage growth remains stubbornly low. This is an issue for the boffins at the RBA.
In a speech in September, RBA governor Dr Philip Lowe said the economy was picking up and that faster wage growth and higher interest rates wouldn't be too far behind.
Even so, it would be "some time before we are at what could be considered full employment," he said.
Dr Lowe said while globalisation, competition from new technologies and economic uncertainty would continue to depress wages for "a while yet" he did not see stagnant wage growth as a "permanent state of affairs".
Mr Tharenou said the RBA was "dovishly" questioning the Phillips curve - which he thinks is already close to broken.
He said the RBA's long-held view remained that "stronger conditions in the labour market should see some lift in wage growth over time".
But only recently had the RBA started to question the Phillips curve, Mr Tharenou said.
In the minutes of its November meeting, the RBA board said it had discussed the possibility that "globalisation and technology were leading wage growth to be less responsive to changes in the demand for labour, which could continue for a while."
"There was considerable uncertainty around when and how quickly wage pressures might emerge and about how much these would add to inflationary pressure," the board said.
Despite the tightening jobs market, employers are containing costs by slowing wage growth as company competition grows, he said.
This is making it "plausible that the wage- and price-setting processes are adjusting in response." he said.
