Australian real wages are at a new low, despite a small but lower-than-expected increase in the hourly rate for December.
The Australian Bureau of Statistics released the seasonally adjusted Wage Price Index on Wednesday which showed a 0.8 per cent increase in the December quarter, or 3.3 per cent annual.
But the real value of wages has fallen as inflation at 7.8 per cent is well ahead of wage growth, meaning the gap between wages and prices is now 4.5 per cent.
ABS head of prices statistics Michelle Marquardt said private sector wage growth over the quarter (0.8 per cent) was slightly higher than in the public sector (0.7 per cent).
Australian real wages are at a new low, despite a small but lower-than-expected increase in the hourly rate for December (pictured, a lollipop lady in Sydney)
The gap between Australian wages and prices is now 4.5 per cent (pictured, a hospitality worker in Sydney)
‘It was, however, higher than any December quarter increase across the last decade,’ Ms Marquardt said.
BIS Oxford Economics’ head of macroeconomic forecasting Sean Langcake said the WPI was below expectation, showing the breakout in wages growth was not as bad as the RBA had feared.
‘These came in a little bit softer than expected, certainly both the market and the RBA expected it stronger,’ Mr Langcake said.
‘It’s still a pretty brisk pace of wage growth but it’s not signalling the break out of wages growth the RBA has been fearing and concerned about.
‘Unfortunately, we just have to wait to see how things play out.’
Senior economist at the Australia Institute Matt Grudnoff said this was ‘the largest drop in real wages in Australian history.’
‘To blame workers for current inflation while they experience unprecedented real wage drops, and companies post surging profits, is economic gaslighting of the highest order,’ Mr Grudnoff said.
‘This data shows fears of a ‘wage-price spiral’ similar to the 1970s are a speculative fantasy.
Economists say this is the largest drop in real wages in Australian history as inflation at 7.8 per cent is well ahead of wage growth (pictured, a hospitality worker in Sydney)
Statistics have revealed private sector wage growth over the quarter (0.8 per cent) was slightly higher than in the public sector (0.7 per cent)
‘That story is now itself a risk to the Australian economy. Australians are not living in the 70s. We are falling behind on the cost-of-living in 2023.’
ACTU secretary Sally McManus said the figures showed wages growth was not the problem.
‘This is the greatest drop in workers’ real pay in recorded history,’ she said.
‘Wage growth is clearly not contributing to inflation. Any wage rises in 2022 and early 2023 have been eaten up by price rises and interest rate rises.’
Employment Minister Tony Burke agreed.
‘Wages growth isn’t the problem when it comes to inflation, it’s part of the solution to cost of living pressures,’ Mr Burke said.
‘We don’t have an inflation challenge in our economy because wages are too high, but because of a war in Ukraine, pressure on global supply chains and other challenges in our own economy ignored for too long.
Employment Minister Tony Burke said wage growth would be part of the solution to cost of living pressures as Australian households buckle under financial pressures
‘We seek wages growth which is strong and sustainable, and an economy which is more productive, competitive and inclusive.’
He said industries with the strongest WPI growth in the December quarter were accommodation and food services, arts and recreation services and manufacturing.
BIS Oxford Economics’ Sean Langcake said he doesn’t believe the latest wage growth will mean the RBA believes ‘their work is done’, forecasting further inflation rate hikes over the next three months.
‘They’re going to be concerned until inflation is relatively on its way back down,’ he said.
The ABS data showed private sector wage growth over the quarter (0.8 per cent) was slightly higher than in the public sector (0.7 per cent).
The Australian Bureau of Statistics showed private sector wage growth over the quarter (0.8 per cent) was slightly higher than in the public sector (0.7 per cent)
Mr Langcake said it wasn’t ‘surprising’ the country recorded its highest annual growth in hourly wages in more than a decade.
‘The unemployment rate is the lowest it’s been in 40 years and has been for about six months; those things should go hand in hand,’ he said.
‘When the unemployment rate is really low, labour is very scarce and the market has to pay for it.
‘I think, really, the labour market is operating as expected.
‘Policy makers will be really wanting to guard against a world where people can expect four or five per cent inflation increase.’
Source: | This article originally belongs to Dailymail.co.uk