You may recall the “productivity debate” we had a couple of years ago when business and the Coalition, from Tony Abbott down, insisted Australia had a productivity problem, and it was because of Labor’s Fair Work Act. Inconveniently, however, labour productivity then proceeded to increase significantly. It’s still rising, in fact. It took a long while, but eventually the repeated hammer blows every three months in the national accounts numbers muted the incessant drone about labour productivity. True, some business leaders still can’t help themselves and reflexively lament our poor productivity, but after two years of constant numbers showing rising productivity, the message got through.

So the question is, how long until business and some in the government stop whingeing about wages? For a year now, wages have been growing more slowly than inflation, yesterday’s Wage Price Index shows. In 2013-14, wages rose 2.6%, while the CPI rose 3%. For those not employed in the public sector, wages rose just 2.4%, seasonally adjusted. In real terms, average workers are going backwards. It’s the largest annual real wage fall since 2008.

As AMP chief economist Dr Shane Oliver wrote yesterday, “[t]his tells us that labour costs are no threat to inflation but by the same token highlights that household income growth remains very weak, which partly explains why consumer confidence is low relative to business confidence”.

Wages rose 0.6% in the quarter, which was down from the 0.7% fall in the March quarter, indicating that growth continued to slow. Workers in some sectors fared OK: mining wages were up 0.9% in the quarter (no surprise there, they were well over 1.5% a quarter during the boom). But wages rose just 0.1% in accommodation and food services — exactly the sector where the business whining about penalty rates is shrillest. Public sector wages though rose 2.8% (even though conservative governments are in power federally and in every state except South Australia and the ACT), so public sector workers also went backwards, but at half the rate of those private sector employees.

“One business’ wage costs are another business’ revenue, and falling real wages is bad news for sectors like retail that rely on household demand.”

Based on this data, the June quarter national accounts will show a continuation of the fall in real unit labour costs seen over the past year or so. The March quarter national accounts showed real unit labour costs (non-farm) fell 1.0% to be down 1.5%. This means workers are becoming more attractive for employers to hire because their costs are outweighed by their productive value. But that’s not happening with labour force growth slowing from around 90,000 in the March quarter, to just over 20,000 in the June quarter.

The chief complaint about the Fair Work Act was that it prevented businesses from responding flexibly to changing economic circumstances and gave unions too much power in wage bargaining. But that argument becomes impossible to sustain when you look at how real wage levels have responded to the softer economic growth and rising unemployment that has characterised the last 12 months.

Over the next one to two years, the weak rate of growth in wages will be one of the main influences on the economy. In the Reserve Bank’s third Statement of Monetary Policy of the year, the bank saw the current weak employment position not improving until 2016, and keeping labour costs under control for quite a while:

“Over the past two years, the growth of wages, as measured by the wage price index, has declined to its slowest pace in at least 15 years. Wage growth is expected to pick up only slightly from its current pace over the forecast period, remaining significantly below its decade average of 3-3⁄4 per cent. At the same time, productivity growth is expected to remain a bit above its average of the past decade, helping to keep overall labour cost pressures well contained. This sustained period of slow growth in labour costs should assist in an improvement in the international competitiveness of Australian firms, which will lend more support to labour demand than would otherwise be the case. Meanwhile, spare capacity in labour and product markets is expected to see domestic inflationary pressures remain contained. Inflation in non-tradables items, which tends to be affected more by domestic demand and supply, and less by the exchange rate, has declined over the past year to around its slowest pace in 10 years. This slowing has been particularly marked in those components that are generally more sensitive to growth of labour costs.

Of course, one business’ wage costs are another business’ revenue, and falling real wages is bad news for sectors like retail that rely on household demand. As we noted a couple of months ago, a report for the Australian Food and Grocery Council managed to simultaneously complain about high wages and weak wages growth. And at the moment, real wage falls will add the vicious circle effect of slower economic growth, rising unemployment, weak consumer sentiment and flat retail sales.

But for businesses that aren’t reliant on domestic demand, things could hardly get better — low inflation, real wage falls and labour productivity growth. And the June 30 reporting season shows that companies large and small are lifting dividends to shareholders faster than the rate of growth in wage rises. The Commonwealth Bank, for example, yesterday lifted profit 14% and dividends by 10% and its 2014 staff wage rises were lifted to 3.75%, from 3.5% last year — both substantially less than the increases in shareholder payments. Companies are also adding share buybacks to profit rises and dividend increases. Good times.

But reckon that will stop them whingeing about workers? Don’t bet on it.