Australians struggling with the cost of living crisis are actually worse off than most other workers around the world, new OECD figures show.
The cost of living crisis is particularly acute in Australia because wages have lagged behind inflation for three years.
The OECD estimates that Australian real wages in the March 2024 quarter were 4.8 per cent weaker than at the end of 2019, shortly before the Covid-19 pandemic.
“This is one of the largest declines in real wages among OECD countries,” he said.
‘Real wages rose in 2024 for the first time in almost three years, but households still face pressure under the cost of living shock.’
This has left Australian workers even worse off than their rich-world counterparts in Spain, Germany and the United States, where wages have also fallen in real, inflation-adjusted terms.
This is despite Premier Anthony Albanese promising to “get wages moving” with new multi-employer bargaining laws in 2022.
“Real wages are growing year on year in most OECD countries, in a context of declining inflation,” the OECD said.
According to new OECD figures, Australians are actually worse off than workers in most other rich countries
This has left Australian workers even worse off than their rich-world counterparts in Spain, Germany and the United States, where wages have also fallen in real, inflation-adjusted terms.
“However, they are still below their 2019 level in many countries.”
Australian wages lagged inflation from the June 2021 quarter (when Sydney went into lockdown) to the March 2024 quarter.
This meant that Australian workers effectively suffered a pay cut for three years.
Inflation now stands at 3.6 percent, compared with 4.1 percent for wages, but the real wage increase of 0.5 percent is still quite weak compared with rising rent, gasoline and electricity prices.
After years of stagnant or falling wage growth, the OECD said a wage-price spiral like that of the 1970s was unlikely to occur.
“As real wages are regaining some of the lost ground, profits are beginning to cushion some of the rise in labor costs,” he said.
‘In many countries, there is scope for profits to absorb further wage increases, especially as there are no signs of a wage-price spiral.’
Australia’s lowest-paid workers are not much better off than they were five years ago, despite some big increases in the minimum wage.
Adjusted for inflation, the real minimum wage is only 2.3 percent higher than in 2019, well below the average increase of 8.3 percent in the OECD.
Australia’s 2.7 million workers on the national minimum wage or receiving a premium received a 3.75 per cent pay rise on July 1, just above the 3.6 per cent inflation rate.
OECD Secretary-General Mathias Cormann (left with former Treasurer Joe Hockey) resigned as Australia’s Liberal finance minister in October 2020 and began his six-year term in Paris in June 2021.
This raised the full-time minimum wage to $47,627, which is still only half of Australia’s average full-time wage of $98,218.
Unemployment remains low at 4 percent, and the OECD predicted it would only rise to 4.3 percent by the end of 2025.
This figure would still be below the OECD average of 4.9 percent.
“Labour market tensions continue to ease, but remain elevated overall,” the OECD said.
OECD Secretary-General Mathias Cormann resigned as Australia’s Liberal finance minister in October 2020 and began his six-year term in Paris in June 2021.
