Low interest rates won’t be enough for Australia to generate wage growth, the Reserve Bank and Morrison government have been warned amid signs shoppers are continuing to tighten their belts.

As Labor calls on the government to do more for those parts of Australia where the jobless rate is above 20 per cent, exclusive analysis by Ernst & Young suggests a key part the RBA's plan to lift wages may fail without a major change in government policy.

The bank has cut official interest rates twice since the start of June with the stated aim of driving the unemployment rate down to at least 4.5 per cent, which it believes will be low enough to put upward pressure on wages.

The RBA's plan to drive up wages via lower interest rates could fail if events overseas are replicated here, Ernst and Young has warned Credit:Rob Homer RZH

But Ernst & Young chief economist Jo Masters said there were now 462,000 more Australians looking for work than job vacancies while under-employment - those people wanting more working hours - is 8.2 per cent.