Workers hit with largest wage decline on record
Workers are experiencing the largest decline in real wages on record, latest wage growth data has revealed.
With wages moving at just 3.3% in the last year amidst soaring inflation of 7.8%, real wages are down 4.5% – the largest gap between the two metrics ever observed.
Some economists have labelled the Reserve Bank’s repeated interest rate rises “economic gaslighting” given that workers are clearly not driving inflation and there is no wage price spiral at play.
"To blame workers for current inflation while they experience unprecedented real wage drops, and companies post surging profits, is economic gaslighting of the highest order," Matt Grudnoff, senior economist at the Australia Institute, told the ABC.
Falling real wages devastating to households
For households to maintain their purchasing power, wage increases need to match inflation.
But with wages lagging far behind inflation, households cannot afford the same amount of goods and services that they used to.
And this has left many struggling to get by.
The same cannot be said for profits, which are surging, as costs are being passed onto consumers without businesses taking a hit to their bottom line.
Despite this, economists expect the Reserve Bank to continue with a number of further rate rises aimed at curbing consumer spending.
This will undoubtedly push many workers and families to the brink.
Unions say wages must match inflation
Wage increases that match inflation are crucial, particularly for lower income earners, to ensure workers can cope with soaring cost of living pressures.
Looking ahead to the upcoming minimum wage case, where the Fair Work Commission (FWC) sets rates of pay for minimum wage workers, QCU Acting General Secretary Jacqueline King told the SMH she expected the government to endorse a wage rise to match inflation.
“Fair Work now has to consider gender equality and job security as objects of workplace law in deciding the new minimum wage,” she said.
Ms King said workers cannot be expected to keep waiting for fair wage increases.
“Workers have endured over a decade of relatively flat wages and have consistently been told it’s not the right time to lift wages,” she said.
“What is abundantly clear is that for many businesses it’s never going to be the right time for a pay increase.
“I think the community is no longer willing to accept that attitude so we can expect strong campaigns from workers through their unions to deliver fair pay increases.”