Wage increases are keeping ahead of inflation but only just.
New figures show annual wage growth was just 2.3 per cent as of the September quarter, unchanged from the previous three months and the slowest in almost two decades.
Treasurer Scott Morrison says there are two ways to increase wages - through a pay rise from an employer because of increased productivity or from the treasurer through an income tax cut.
"I would like to see both," he told the Bloomberg Summit in Sydney on Wednesday, adding Australians needed to earn more on a competitive world stage.
The result of the September quarter wage price index - the Reserve Bank's preferred measure of wage inflation - compares the present inflation rate of 1.5 per cent.
Commonwealth Securities chief economist Craig James said clearly wage inflation is not a concern for the central bank and it can scratch it from its "wall of worry".
He said signs of improvement in the jobs markets, which has seen the unemployment rate fall below six per cent, are because the cost of labour has become more affordable for businesses.
But while low wage growth is good for keeping costs down for businesses, it makes it more difficult for consumer-focused firms.
The RBA's minutes from its November 3 board meeting released this week reiterated that the inflation outlook may allow scope for a further easing in the cash rate should it be needed.
The cash rate has stood at an all-time low of two per cent since May.
However, other figures released on Wednesday point to an improving economy next year, albeit still lagging its long-term average of 3.25 per cent.
The Westpac-Melbourne Institute leading index points to a growth rate of 2.75 per cent in three to six months.
"If achieved, the growth rate will represent a marked improvement on the 2.3 per cent we expect for 2015," Westpac chief economist Bill Evans said.
He expects this improvement to come from in household spending and exports, particularly in the services sector.
