Workers only got a 0.5 per cent pay rise in the three months to March, just above the softest result in the history of the series in the three months to September 2016, and below the 0.6 per cent wage growth the market had predicted. The private sector - where 77 per cent of Australians work - is struggling to keep up with the rising cost of consumer goods, having offered workers a pay rise of 1.9 per cent, in line with inflation, while public servants received a 2.3 per cent pay rise. Bonuses, not pay rises Loading Most of the gains were driven by the education, health care and social assistance industries. And there were signs to suggest employers are more willing to give out bonuses than permanently raise pay packets, with the measure of wages including bonuses rising by 2.7 per cent over the year.

"While firms are finding it more difficult to find suitable labour, they are reluctant to lock themselves into a permanently higher wage bill given a perceived inability to pass on any increased costs in the form of higher prices," said a note from ANZ. "Paying higher bonuses potentially gives firms additional flexibility around pay rises." The mining industry once again copped the lowest wage rises of any industry, well below the rising cost of a consumer basket at 1.4 per cent, while health care workers got an increase of 2.7 per cent. Looking at state findings, Victoria and Tasmania recorded the highest through the year wage growth of 2.3 per cent, NSW lagged behind both at 2.1 per cent, while the Northern Territory recorded the lowest of 1.1 per cent. Retail workers doing it tough

Retail workers are doing it particularly tough nationwide, with the sector's 1.3 million employees banking an average pay rise of just 1.5 per cent -- which amounts to a 0.4 per cent pay cut in real terms compared to inflation. Construction also continued its sluggish wage performance despite a building boom across the country, with worker's pay rising by just 1.8 per cent. The lethargic results across the economy will be seized on by Treasurer Scott Morrison to argue for company tax cuts, as Labor questions whether cuts for businesses will end up in the pockets of workers. "The less that they have to pay to the government means that they can invest in the business, provide great services, training people and better wages," Mr Morrison said on Wednesday.

Mr Morrison booked in a wage rise from its flat rate of 2.1 per cent to 2.25 per cent by the end of June, followed by a sudden increase to 3.25 per cent by 2019-20 in last week's federal budget. A softer than expected result in June would mean both Labor and Coalition governments have missed the forecasts for the present quarter for four of the past six budgets. 'Fairly enthusiastic assumption' The former secretary of the Department of Finance, Jane Halton, criticised the government's wage growth expectations on Tuesday. They are seen as crucial to delivering the tax revenues needed to return the budget to surplus.

"Running at over 3 per cent by the end of the forward estimates anyone would have to say based on what we are seeing internationally, I wouldn't necessarily call it heroic but it has got to be a fairly enthusiastic assumption," she said. Her comments followed concerns from the Reserve Bank that historical comparisons to when the economy could expect wages growth to reignite needed to be reassessed. The RBA minutes noted wages had not picked up as quickly as they had in the past from a tightening of the labour market and a similar phenomenon had occurred in the US and New Zealand, citing competitive pressures from globalisation and technology. "The experience of other countries with labour markets closer to full capacity than Australia's is that wages growth may remain lower than historical experience would suggest," RBA deputy governor Guy Debelle said on Thursday. "In Australia, 2 per cent seems to have become the focal point for wage outcomes, compared with 3 to 4 per cent in the past," he said.

'Stuck in the mud' Capital Economics chief economist Paul Dales said wages were now unlikely to rise to 2.5 per cent before 2020 - casting Treasury's forecasts into doubt - and interest rates were going nowhere above the record low of 1.5 per cent. "With wage growth stuck in the mud at 2.1 per cent in the first quarter and likely to stay there or thereabouts, the prospect of a rate rise in Australia next year has diminished further," he said. "Our view is that the unemployment rate would need to fall to 4 per cent to signal that the labour market is in equilibrium, [which] means a strong cyclical rise in wage growth is not on the horizon."