Treasurer Jim Chalmers puts a political spin on the news, annual wage growth has slowed for the first time since 2020, deepening the cost of living crisis
- The wage price index fell for the first time since 2020
- Treasurer Jim Chalmers took a clever spin on the data
Australian wage growth has fallen for the first time since the 2020 Covid shutdowns, deepening the cost of living crisis – but the Treasurer has managed to pass off the latest figures as good news.
The wage price index in June fell to 3.6% from an annual rate of 3.7% in March.
This is the first drop in annual growth since the September quarter of 2020 following the nationwide Covid shutdowns.
After stabilizing in 2020, annual wage growth has steadily increased in every quarter since June 2021, but that has now changed.
With an increase in the cost of living for employees of 9.6% in the year to June, according to calculations by the Australian Bureau of Statistics, this means that workers are effectively taking a 6% reduction in their wages. real.
Those with jobs are more likely to struggle with soaring rents or mortgage payments, which means their cost of living is worse than the 6% inflation rate.
But in a clever political twist, Treasurer Jim Chalmers focused on how the 0.8% rise in the wage price index, in the three months to June, matched the three-month rise month of the consumer price index over the same period.
“This is the first time in three years that quarterly wages have tracked inflation – and much better than the 1.5% decline in the March 2022 quarter,” he said.
Australian wage growth on an annual basis has fallen for the first time since the Covid lockdowns of 2020 – deepening the cost of living crisis (pictured is a Sydney construction worker)
Dr Chalmers took the opportunity to praise Prime Minister Anthony Albanese for multi-employer bargaining.
“The Albanian government’s economic plan is to develop wages in a sustainable way,” he said.
“It helps Australian workers earn enough to support loved ones and progress.”
Shadow treasurer Angus Taylor called it a spin designed to distract from cost-of-living pressures, noting Mr Albanese’s push for a public holiday if the Matildas won the Women’s World Cup FIFA soccer.
“With real wages falling, hours worked rising and inflation still stubbornly high – nobody feels better no matter how the treasurer tries to spin it,” he said.
“Between the voice of Canberra and a Bank Holiday thought bubble, Labor is focused on everything but the economy at a time when hard-working Australian families are feeling the intense pressures of Labour’s cost of living crisis. “
But with overall wage growth declining on an annual basis, it means the Reserve Bank may be less likely to raise interest rates, with fewer signs of a wage-price spiral.
The Reserve Bank of Australia expected annual wage growth to continue rising until it topped the 4% mark next year for the first time since 2009.
“Wage growth – as measured by the wage price index – is expected to increase in the second half of 2023 due to continued tight labor market conditions, wage and minimum wage increases and wage developments of the public sector,” he said in the Minutes of the August meeting.
Private sector wage growth on an annual basis remained at 3.8%, with civil servants seeing their wages increase slightly to 3.1% from 2.9%.
In a clever political twist, Treasurer Jim Chalmers (right with Jobs Minister Tony Burke) focused on how the 0.8% rise in the wage price index, over of the three months preceding June, equaled the three-month rise in the consumer price index over the same period
The RBA left rates unchanged in August at an 11-year high of 4.1%, marking the second consecutive monthly break.
Commonwealth Bank chief economist Belinda Allen said rate cuts are now expected to start by March 2024 and continue until the end of next year until the cash rate returns at 3.1%.
“But the risk is a late start date for the easing cycle if the labor market remains more resilient than expected,” she said.
Unemployment in June remained at its lowest level in 48 years, at 3.5%, even though the Reserve Bank’s 12 interest rate hikes since May 2022 were the most aggressive since 1989.