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ACTU boss Sally McManus slams ‘boomer fantasy’ that wage increases will hike inflation

Union boss SLAMS Reserve Bank on her ‘boomer fantasy’ that wage increases for average Aussies will push up food prices – as she demands massive hikes

  • Reserve Bank governor Philip Lowe warned of a 1970s wage-price spiral
  • He fears that if workers continue to receive high wage increases, inflation will increase
  • ACTU boss Sally McManus has dismissed the idea as a ‘boomer fantasy’
  • She says teachers and nurses who threaten strikes deserve everything they want

Australian Council of Trade Unions boss Sally McManus has dismissed the idea that large wage increases for workers are fueling inflation as a ‘boomer fantasy’.

Last week, the Fair Work Commission raised the minimum wage by 5.2 percent and gave a 4.6 percent raise to some 2.7 million contractors.

That prompted Reserve Bank governor Philip Lowe to warn that if high wage increases continue, prices would rise further after inflation hit 5.1 percent in the March quarter.

The fear is that if more workers have more money, there will be more demand for goods and services, causing prices to rise.

Teachers march to Parliament House during a strike by NSW teachers and public school principals in Sydney in December

Teachers march to Parliament House during a strike by NSW teachers and public school principals in Sydney in December

The workers will then demand more money, leading to a never-ending spiral of inflation.

“In the 1970s, we ran into trouble as wage growth reacted mechanically to higher inflation,” Dr. Lowe told the US Chamber of Commerce in Australia.

“We had higher inflation, wages reacted and then it gets sustained, and then you have to have higher interest rates and a downturn to get inflation down.”

But Ms. McManus rejected this argument, saying that the union members demanding large wage increases make up only a small fraction of the workforce.

Sally McManus (pictured) has dismissed the idea that big wage increases for workers will fuel further inflation as a 'boomer fantasy'

Sally McManus (pictured) has dismissed the idea that big wage increases for workers will fuel further inflation as a ‘boomer fantasy’

“The price spiral of the 1970s is a real boomer fantasy,” she told ABC radio.

“It’s used by a lot of employers to say no, you can’t get raises or demand raises for workers.”

The left-wing ACTU chief, Ms. McManus, said unions are not powerful enough to push through major wage increases across the economy and stressed that the only way to stop teachers and nurses from going on strike is to give them more money.

Last government figures August 2020 found that only 14 percent of workers were union members.

“If union members achieve those results, it doesn’t mean everyone else who isn’t unionized will get those pay increases,” Ms McManus said.

“They won’t, they’ll have to fend for themselves. That’s how the system works.

dr. Lowe said pay increases of 3.5 percent were more sustainable.

But Ms. McManus said, ‘We’re not going to get 3.5 percent, let alone five percent, let alone seven percent.

“And so to somehow think that the system will bring in an overall pay rise of five or seven percent is boomer fantasy land.”

Ms McManus said the only way to end the strikes, which have been threatened in NSW, is for employers to give workers more money.

Shopping has become more expensive due to rising inflation.  Pictured: A Coles

Shopping has become more expensive due to rising inflation. Pictured: A Coles

“I think it depends on employers whether there will be more strikes,” she said, referring to public sector workers in Australia’s most populous state.

“In this case, the reason for the strike is because, you know, the New South Wales government is offering three percent, which is less than what Philip Lowe was talking about.

“So let’s get some realism here. Those workers definitely deserve a raise, as do the nurses and all the workers who are currently fighting for it.

“They make every cent and probably more.”

Workplace Secretary Tony Burke said on Wednesday that Labor does not believe that wage increases should be automatically linked to inflation.

“We never said or suggested that there would be an ongoing alignment with wherever inflation was,” he said.

On Tuesday, Reserve Bank governor Philip Lowe (center) warned that if high wage increases continue, prices would rise further after inflation hit 5.1 percent in the March quarter.

On Tuesday, Reserve Bank governor Philip Lowe (center) warned that if high wage increases continue, prices would rise further after inflation hit 5.1 percent in the March quarter.

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