Workers hoping for a pay rise will have to wait until next year, with the Reserve Bank of Australia revealing a grim prediction.
Australians hoping for a pay rise will have to wait until next year before real wages improve.
The Reserve Bank of Australia projects real wages will continue to decline until December 2023. This means that increases in the cost of living will continue to rise much more than wages.
The bank, which raised the cash rate for the first time since 2010 last weekpredicted inflation would reach about 5.9 percent by the end of this year, but wages would rise only 3 percent over the same period.
This is unlikely to pick up until December next year, when inflation is expected to fall to around 3.1%, while wage growth is expected to be slightly higher at 3.5%.
It comes as the federal opposition slammed Scott Morrison for failing to help families with living expenses, with Labor MP Tanya Plibersek saying the prime minister had ‘completely given up’.
The opposition education spokeswoman reiterated Labor’s pledge to do more to raise wages if elected to government to tackle soaring inflation.
However, the Reserve Bank added that the tight labor market and higher inflation environment meant that a growing number of private sector companies were paying higher wages and other benefits to attract and retain labor. staff.
“While overall wage growth accelerated in 2021, it was no higher than before the pandemic,” he said.
“However, the most recent evidence from liaison and company surveys indicates that larger wage increases have occurred or are expected at many private sector companies.”
According to Treasury budget documents released earlier last week, the price of what most households buy has risen 3.5% over the past year, while wage growth has risen just 2%. .3%.
This means that the actual result is that wages have fallen by 1.2% over the past 12 months.
However, the Treasury expects the current labor market to change that in the future.
“The labor market has shown remarkable strength and resilience, with conditions rebounding rapidly from the delta and omicron outbreaks,” the Treasury documents read.
“The strength of the labor market should continue to encourage participation, as job growth and rising wages draw people into the labor market, providing more labor supply in response to a strong demand.”
The unemployment rate was also revised due to the strength of the market.
It is now expected to drop from 4% to 3.75% by September 2022. That would make it the lowest unemployment rate in the country for almost 50 years.
The Treasury expects wage growth to outpace inflation by 0.25 percentage point in 2022-23, 0.5 percentage point in 2023-24 and 0.75 percentage point in 2024- 25, driven by higher nominal wage growth and lower inflation. Inflation is expected to fall back to the upper end of the Reserve Bank of Australia’s 2-3% target range by next fiscal year.
It comes as Labor MP Tanya Plibersek accused Prime Minister Scott Morrison of having “completely given up” on supporting families struggling with cost of living pressures.
“Our plan to help with wages means helping businesses with their productivity,” Ms. Plibersek told ABC. Insiders program.
“So we’re making sure we’re investing in cheaper energy, better NBN connections, lowering the cost of doing business, investing in training and education so they have more skilled workers.
“So make sure we invest in cheaper energy, better NBN connections, lower the cost of doing business, invest in training and education so they have more skilled workers.”
According to new analysis from the Australian National University, nearly two-thirds of 3,500 people polled said the high cost of living should be the next government’s number one priority – whether they are inclined to vote for Labour, the Coalition or neither.
Study co-author Nicholas Biddle said voters wanted the cost of living to be addressed urgently, so much so that it trumped all other political considerations.
“Interestingly, we also found that this was a view shared by people who said they would vote for Labour, for people who said they would vote for the Coalition and for people who weren’t planning to vote for either party,” he said. .
“For Coalition voters, 60.8% said it was the highest priority. Among Labor voters it was even higher, with 68.8% saying the same.
Mr Morrison – who has built much of his re-election pitch on the idea that his party is the best economic manager – said rising cost-of-living pressures in Australia were lower than those faced by the other countries were facing.
“The situation Australia is facing is a situation the whole world is facing,” he said earlier this week.
“Australians understand that.”