Australian workers are experiencing the biggest drop in real wages on record

Australian real wages are at a new low despite a small but lower than expected hourly wage increase for December.

The Australian Bureau of Statistics released the seasonally adjusted wage price index on Wednesday, which showed a rise of 0.8 percent in the December quarter, or 3.3 percent annually.

But the real value of wages has fallen as inflation, at 7.8 percent, far outstrips wage growth, meaning the gap between wages and prices is now 4.5 percent.

Michelle Marquardt, head of ABS price statistics, said wage growth in the private sector (0.8 percent) was slightly higher than in the public sector (0.7 percent) in the quarter.

Australian real wages are at a new low despite a small but lower-than-expected increase in hourly wages for December (pictured a lollipop lady in Sydney).

The gap between Australian wages and prices is now 4.5 per cent (pictured a hospitality worker in Sydney).

“However, it was higher than any increase in the December quarter in the last decade,” said Ms. Marquardt.

Sean Langcake, head of macroeconomic forecasts at BIS Oxford Economics, said the WPI came in below expectations, showing the wage growth burst was not as bad as the RBA had feared.

“These came out a bit softer than expected, certainly both the market and the RBA expected it more,” said Mr. Langcake.

“It’s still a fairly buoyant pace of wage growth, but it doesn’t signal the burst of wage growth that the RBA feared and worried about.

“Unfortunately, we’ll just have to wait and see how things develop.”

Lead economist at the Australia Institute Matt Grudnoff said it was “the largest fall in real wages in Australian history”.

“Blaming workers for the current inflation while they experience unprecedented real wage declines and corporations post soaring profits is economic gaslighting at its finest,” Grudnoff said.

“These data show that fears of a ‘wage-price spiral’, much like those of the 1970s, are a speculative fantasy.

Economists say this is the biggest drop in real wages in Australian history, as inflation is well ahead of wage growth at 7.8 per cent (pictured a hospitality worker in Sydney).

Statistics showed that wage growth in the private sector (0.8 percent) was slightly higher than in the public sector (0.7 percent) in the quarter.

“This story is now itself a risk to the Australian economy. Australians don’t live in the 70’s. We are falling behind on the cost of living in 2023.”

ACTU Secretary Sally McManus said the numbers show wage growth is not the problem.

“This is the largest drop in workers’ real wages in recorded history,” she said.

“Wage growth is clearly not contributing to inflation. All wage increases in 2022 and early 2023 were eaten up by price hikes and rate hikes.”

Labor Secretary Tony Burke agreed.

“Wage growth isn’t the problem when it comes to inflation, it’s part of the solution to the cost of living pressures,” Burke said.

“We don’t have an inflation problem in our economy because wages are too high, but because of a war in Ukraine, pressures on global supply chains and other challenges in our own economy that have been ignored for too long.

Labor Secretary Tony Burke said wage increases are part of the solution to the pressure on the cost of living as Australian households collapse under financial pressure

“We aim for strong and sustainable wage growth and an economy that is more productive, competitive and inclusive.”

He said the industries with the strongest WPI growth in the December quarter were lodging and food services, arts and leisure services and manufacturing.

Sean Langcake of BIS Oxford Economics said he doesn’t think recent wage growth will mean the RBA believes “its job is done” and forecast further hikes in inflation over the next three months.

“They’re going to worry until inflation is relatively on the way back down,” he said.

ABS data showed that wage growth in the private sector (0.8 percent) was slightly higher than in the public sector (0.7 percent) over the quarter.

The Australian Bureau of Statistics showed that wage growth in the private sector (0.8 percent) was slightly higher than in the public sector (0.7 percent) over the quarter.

Mr Langcake said it was not “surprising” that the country saw its highest annual growth in hourly wages in more than a decade.

“The unemployment rate is the lowest in 40 years and has been for about six months; those things should go hand in hand,” he said.

“When the unemployment rate is very low, labor is very scarce and the market has to pay for it.

“I really think the labor market is working as expected.

“Policymakers are really going to want to protect themselves from a world where people have to expect inflation to rise by 4 or 5 percent.”

Source: | This article originally belongs to Dailymail.co.uk