New figures show real wage growth was going backwards even before the expected crunch to the economy from widespread virus lockdowns.
The economy is widely expected to contract in the September quarter as a result of over half the population being under restrictions.
Asked if Australia can avoid another recession, Prime Minister Scott Morrison told reporters he remained confident that once the country is vaccinated and can be opened up again, the economy will rebound.
"Once you're able to release these restrictions then we see the economy come back very, very, very strongly," he said on Wednesday.
But in the meantime, economists expect Thursday's labour force figures will show the unemployment rate rising to five per cent in July from the decade low of 4.9 per cent in June.
Finance Minister Simon Birmingham conceded there are some big impacts from the lockdowns across the eastern seaboard.
"Whilst there will probably be some impact in tomorrow's figures, we also think that the type of assistance we're delivering will enable us to come back quickly again," Senator Birmingham told 6PR radio.
However, the strong recovery in the jobs market since last year's recession has had little impact on wages growth, confirming that a rise in the Reserve Bank's cash rate is still years away.
The wage price index - a key guide for wages growth used by the RBA and Treasury - rose just 0.4 per cent in the June quarter to an annual rate of 1.7 per cent.
While this was up from 1.5 per cent as of the March quarter, it remains close to the record low 1.4 per cent seen in the second half of 2020.
It is also well below the current rate of inflation at 3.8 per cent, indicating that real wages are going backwards.
"Wages were weak well before COVID-19, have remained weak during the pandemic, and the reward for Australians who have sacrificed so much to keep each other safe will be a further cut to their real wages in the years ahead," shadow treasurer Jim Chalmers told AAP.
ACTU president Michele O'Neil said the combined impact of workers with less money to spend, insecure jobs, and lockdowns has a devastating effect on the whole community and economy.
Private sector wages grew by 0.5 per cent in the quarter, while public sector wages grew by 0.4 per cent, the Australian Bureau of Statistics said.
It said apart from a few isolated examples of skills shortages placing pressure on employers to meet expected market rates, the private sector wage growth recorded over the quarter was generally subdued.
The RBA does not expect the conditions to lift the cash rate from 0.1 per cent to be in place before 2024, which includes wages growth being closer to three per cent.
Wages growth has not been above three per cent since early 2013.
Meanwhile, there are already signs the Australian economy will be slowing in the coming months as a result of the lockdowns.
However, at this stage the Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, is still predicting annual growth above 2.8 per cent - the long-term trend.
Westpac chief economist Bill Evans expects the sudden impact of virus lockdowns will become more apparent in August.
Australian Associated Press
