Workers hoping for a pay rise will have to wait until next year, as the Reserve Bank of Australia unveils a grim forecast.
Aussies hoping for a pay rise will have to wait until next year for real wages to improve.
The Reserve Bank of Australia predicts that real wages will continue to decline until December 2023. This means that the rise in the cost of living will continue to rise much faster than wages.
The bank, which last week raised cash interest rates for the first time since 2010, forecast that inflation would be around 5.9 percent by the end of this year, but wages would rise only 3 percent over the same period.
This is not expected to reverse until December next year, when inflation is expected to fall to around 3.1 percent, while wage growth is expected to be slightly higher at 3.5 percent.
It comes as the federal opposition has berated Scott Morrison for not helping families with living expenses, while Labor front bencher Tanya Plibersek said the prime minister had “completely given up”.
The opposition education spokeswoman reiterated Labour’s promise that it will do more to raise wages if elected to government to curb rising inflation.
However, the Reserve Bank added that the tight labor market and the environment of higher inflation meant that an increasing number of private sector companies were paying higher wages and other benefits to attract and retain staff.
“While aggregate wage growth increased in 2021, it was no higher than before the pandemic,” it said.
“However, the more recent evidence from liaison and company surveys is that larger pay increases have occurred or are planned in many private sector companies.”
According to the Treasury budget papers released earlier last week, the price of what most households buy has risen 3.5 percent in the past year, while wage growth has only increased by 2.3 percent.
This means that the real result is that wages have fallen by 1.2 percent in the past 12 months.
However, Treasury expects the current labor market to change this.
“The labor market has shown remarkable strength and resilience, with conditions rapidly recovering from the delta and omicron outbreaks,” Treasury documents said.
“The strength in the labor market is expected to continue to boost participation as employment growth and higher wages draw people into the labor market, creating more labor supply in response to strong demand.”
The unemployment rate has also been revised due to the strength of the market.
The unemployment rate is now expected to fall from 4 percent to 3.75 in September 2022. This would be the lowest level of unemployment in nearly 50 years in the country.
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 to the top of the Reserve Bank of Australia’s target of 2 to 3 percent by next fiscal year.
It comes as Labor frontbencher 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 companies with their productivity,” Ms. Plibersek told ABC’s Insiders program.
“So make sure we invest in cheaper power, better NBN connections, lower the cost of doing business, invest in training and education so they have more skilled workers.
“So make sure we invest in cheaper power, better NBN connections, lower the cost of doing business, invest in training and education so they have more skilled workers.”
According to a new analysis from the Australian National University, nearly two-thirds of 3,500 polled said high cost of living should be the number one priority of the next government – regardless of whether they leaned towards voting for Labour, the coalition or neither.
Study co-author Nicholas Biddle said voters wanted the cost of living addressed urgently, so much so that it surpassed all other policy considerations.
“Interestingly, we also found that this was an opinion of people who said they would vote for Labour, for people who said they would vote for the coalition, and for those who had no intention of voting for either party.” “, he said. †
“For coalition voters, 60.8 percent said this was the top priority. Among Labor voters, it was even higher, with 68.8 percent saying the same.”
Mr Morrison – who has built much of his reelection talk around the idea that his party is the better economic manager – said the rising cost of living in Australia was lower than that faced by other countries.
“The situation Australia is facing is one that the whole world is facing,” he said earlier this week.
“Australians understand that.”