Anthony Albanese has received a fresh campaign boost just three days before the election with new data showing wages are rising at less than half the rate of inflation.
The wage price index in the year to March rose just 2.4 per cent despite unemployment being at its lowest level in 48 years, the Australian Bureau of Statistics revealed on Wednesday.
Over the same period, headline inflation soared by 5.1 per cent – the fastest pace in 21 years after the introduction of the GST – meaning workers have effectively taken a pay cut.
The Labor leader has indicated that, if he wins Saturday’s elections, he would be in favor of the minimum wage increasing at the rate of inflation.
Anthony Albanese has received a fresh campaign boost just three days before the election with new data showing wages are rising at less than half the rate of inflation.
He has been campaigning on the theme that everything will go up except wages after average gasoline prices this year rose above two dollars a liter for the first time in history.
Wage growth has lagged inflation since the middle of last year.
Private sector workers had a 2.4 per cent annual pay rise in the March quarter, while public servants settled for a small 2.2 per cent rise.
Real estate agents and rental property managers had the most generous increase of 3.1 percent.
Australian wage growth has remained stuck below the long-term average of 3 per cent since mid-2013, despite unemployment in March falling to 3.95 per cent, the lowest since 1974.
In the March budget, the Treasury forecast that the wage price index would reach 3.25 per cent during the next financial year 2022-23, but there is very little sign of this so far.
Electrical Union national secretary Michael Wright said the sectors were suffering from a “pay recession”.
“Month after month, year after year, their standard of living has decreased,” he said.
“Australia’s commercial sectors and high-visibility workers are experiencing a pay recession.”
A disappointing pay rise in the March quarter means the Reserve Bank of Australia is slightly less likely to impose a bigger interest rate rise in June.
This month, the RBA forecast inflation would reach 6 per cent by the end of 2022 and noted that workers were effectively taking a pay cut if wages did not rise in line with inflation.
The wage price index in the year to March rose just 2.4 percent even though unemployment is at its lowest level in 48 years. Over the same period, headline inflation soared by 5.1 per cent, the fastest pace in 21 years (pictured, a Sydney cafe worker).
“Despite low unemployment rates, wage growth has not kept pace with inflation, so real wages have declined, in some cases noticeably,” he said.
KPMG senior economist Sarah Hunter said weak wage growth would make the RBA think twice before imposing a larger 0.4 percentage point rise in the cash rate in June, to follow the rise. of 0.25 percentage points in May.
“These figures alone are unlikely to push the RBA into a more aggressive pace of rate hikes, although we still expect to see four more moves this year, to take the cash rate to 1.25 per cent,” he said.
The cash rate rose from a record low of 0.1 percent on May 3 to 0.35 percent.
Under a former centralized industrial relations system in the early 1980s, Australia had a wage inflation spiral in which double-digit wage increases fueled double-digit inflation.
In 1981, Australia had a headline inflation rate of 11 per cent, while average wages rose 14 per cent and minimum wages rose 3.6 per cent, historical data from the RBA and ABS showed. This led Labor leader Bob Hawke in 1983 to campaign on a pledge to tackle wage inflation under an agreement with unions to moderate his wage claims.
In 1981, under a coalition government led by Malcolm Fraser, Australia had an overall inflation rate of 11 per cent, while average wages rose 14 per cent and minimum wages rose 3.6 per cent, historical data showed of the RBA and the ABS.
Labor leader Bob Hawke won the March 1983 election on a promise to tackle wage inflation under an agreement with unions to moderate their wage demands.
His Labor successor, Paul Keating, introduced enterprise bargaining in 1993 to end industry-wide pay rises.