Requirement
The Albanian government came to power promising to change wages.
After a year in office, Treasurer Jim Chalmers said the government had achieved exactly that.
“(Labour) said we would move wages again, and that’s what we’re doing,” he said. said Parliament on September 11.
“An average full-time worker earned $3,700 more in the first year of the Albanian government.”
Is it correct? RMIT ABC Fact Check investigates.
The verdict
Mr. Chalmers’ assertion is misleading.
According to the Australian Bureau of Statistics, the total average weekly wage for full-time employees increased by 3.9 per cent, or $3,738.80, during Labor’s first year in office.
However, experts pointed out that this figure did not take into account the impact of inflation, which outpaced profit growth by 6 percentage points in the year to June 30, as measured by the consumer price index (CPI).
In real terms, total average full-time weekly earnings fell by 2 percent in the year to May 2023.
Instead of employees being “better off”, the average full-time wage actually fell in real terms by $2,012.92 in Labor’s first year in office.
Experts said average incomes could also be adjusted to the rate of bureau-selected cost of living indexes (SCLI), designed to measure inflation in a more targeted way and include costs associated with interest paid on mortgages .
On this basis, wage-earning household inflation reached 9.7 percent and led to a decline in the purchasing power of total wages by $5,470.40 per year.
Similar results were obtained when considering ordinary earnings, which exclude overtime.
A familiar topic of discussion
Mr. Chalmers took to Twitter the same day with a similar claim: “the average full-time worker earns about $3,700 more per year.”
But he was not alone in claiming wages had seen an increase under Labour, with other Labor MPs also saying the average full-time worker was “better off”.
For example, Minister of Aged Care and Sports Anika Wells suggested on September 9, that the average full-time worker was “about $3,700 better off than they were 12 months ago.”
Meanwhile, Labor MP Carina Garland claims Australians had earned an “extra” $3,700 in the government’s first year, while fellow MP Sam Rae file a motion in the same direction on September 12.
Labor MP for Bennelong, Jérôme Laxale, put it a little differently argue: “That’s around $3,700 going straight back into the pockets of Australian workers.”
Tracking average salaries
Experts told Fact Check that the best measure to assess the monetary value of wage growth is ABS. average weekly salary data.
Average weekly earnings provide a quarterly snapshot of the monetary value of average wages across the country.
Previously, Fact Check relied on the wage price index (WPI) to measure wage growth, which shows changes in average hourly wages and wage costs not influenced by compositional or structural changes within the workforce.
Janine Dixon, former head of surveys at the ABS and senior researcher at Victoria University’s Center for Policy Studies, said that while the WPI was the best measure for making a like-for-like comparison of wage growth , it did not take into account the gains associated with moving towards better paid professions.
As an index, the WPI also measures percentage changes over time rather than publishing changes in the monetary value of average wages, as Mr. Chalmers claimed.
Fact Check therefore relied on data on average weekly earnings to assess the treasurer’s claim.
The ABS publishes “original” and “seasonally adjusted” data. The last delete regular calendar-related variations to more clearly reveal underlying movements and was used in Fact Check’s analysis.
What the salary data shows
When Labor won the election in May 2022, ABS data watch the average total weekly wage for an adult employee working full-time is approximately $1,838.30, or $95,591.60 per year.
The latest available data shows that by May this year the figure had resurrected by 3.9 percent to $1,907.20 ($99,174.40 per year) – a weekly increase of $71.90, or $3,738.80 per year.
The ABS also publishes an alternative measure of “ordinary” earnings, which excludes overtime worked.
Based on this, average full-time workers earned $1,838.10 per week in May 2023 ($95,581.20 per year), up from $1,769.80 ($92,029.60 per year) in May 2022.
This equates to an increase of 3.9 percent, or $68.30 per week ($3,551.60 per year).
But what about inflation?
Mr Chalmers claimed workers were “better off” thanks to increases in the average weekly wage under Labor’s leadership.
But as John Hawkins, a senior lecturer at the University of Canberra’s School of Politics, Economics and Society, pointed out, this does not take into account the impact of inflation over the same period.
To understand the real value of changes in weekly earnings, David Hayward, emeritus professor of public policy at RMIT University, said it was necessary to adjust for inflation, better represented in the ABS. consumer price index (CPI).
CPI measures the quarterly change in a group of common goods and services in Australian capital cities, including housing, transport, health and food.
Although this data, most recently released for the June quarter, does not exactly match the average weekly earnings data for the year through May, experts noted that it was a reasonable comparison.
“The June term covers April, May and June, so it is ‘centered’ on May,” Dr Hawkins said.
What Real Wage Data Shows
According to ABS data, consumer prices increased by 6 per cent in the year to June 2023, while average full-time wages increased more slowly, at 3.9 per cent.
Expressed in 2022-2023 dollars, the total average salary increased from $101,187.32 to $99,174.40 per year.
This means that the increase in total average wages was less than the increase in costs by $38.71 per week, or $2,012.92 over a year.
So, in real terms, the average total weekly wage fell by 2 percent in Labor’s first year.
For regular wages, average weekly earnings increased from $97,576.44 to $95,581.20, a decrease of $1,995.24 per year.
“Incomes have fallen, it’s as simple as that,” Professor Hayward said.
The unequal impact of inflation
Like the office explainThe CPI is a general measure designed to calculate price inflation across the household sector.
But as experts have pointed out, the effects of inflation are not always evenly distributed across society.
To account for this, Dr Hawkins said the average weekly wage could also be adjusted to the rate of “some cost of living indices“published by the ABS.
These indices are designed to measure inflation in a more targeted manner across different types of households; for example, older retirees, those receiving other government payments or employees.
The ABS says a key difference in how SLCI is calculated compared to the CPI is in the treatment of the cost of purchasing homes, durable goods and the use of financial services and credit.
It is important to note that SLCI excludes the net cost of the purchase price of properties, but includes changes in the cost of interest paid on mortgages. Conversely, the CPI excludes interest costs but includes purchase prices.
The wage-earning household index rose much more dramatically, to 9.7 percent in the year to June, compared with the broader CPI measure (6 percent).
As a result, the real wages of these households have been eroded more significantly by the impact of inflation.
In real terms, the purchasing power of total earnings of full-time employed households was eroded by $105.20 per week, or $5,470.40 per year, when adjusted to the SLCI Employee Index rate .
Ordinary earnings were eroded by $102.48 per week, or $5,328.96 per year, when adjusted using the wage earner index.
This was more than double the amounts recorded under the broader CPI measure.
Employees, not workers
Dr Dixon said it was also relevant to consider the scope of the ABS’s average weekly earnings survey.
While Mr Chalmers was referring to full-time “workers”, the ABS data actually refers to employees, not workers.
“The statistic is based only on employees and does not include self-employed workers (e.g. Uber drivers) or business owners (e.g. many tradespeople),” she said in an email.
According to ABSThere were 2.2 million independent contractors or other business owners as of August 2022, representing 16 percent of all employed people.
Although the office publishes data on their median earnings, this information is only available from August 2022, a month after Labor came to power, with the next update due in mid-December .
Principal investigator: Sonam Thomas
Sources
- RMIT ABC Fact Check, Election Promise Tracker, May 2023
- Australian Parliament, Hansard, September 11, 2023
- Australian Parliament, Hansard, September 9, 2023
- Australian Parliament, Hansard, September 12, 2023
- ABS, average weekly wage, August 17, 2023
- RMIT ABC Fact Check Anthony Albanese says real wages in Australia have been “stable” for eight years. Is he right?, June 29, 2021
- ABS, wage price index, August 15, 2023
- ABS, consumer price index, August 30, 2023
- ABS, working arrangements, December 14, 2022
- ABS, methodology of selected cost of living indices, August 2, 2023
- ABS, selected cost of living indices, August 2, 2023
