The average wage for an Australian worker is set to go backwards by the worrying amount of $600 in the first half of the year as a modest rise in forecast wages is unfortunately outpaced by soaring inflation.
The Australian Council of Trade Unions has criticised the federal government after wage projections the federal budget were leaked to the media, saying even if the more “optimistic” forecast holds true the picture is still grim.
In his mid-year update in December, Treasurer Josh Frydenberg forecast wages growth of 2.75 percent in 2022-23 and inflation of 2.5 percent, which would have delivered Australians their first real increase in wages in 18 months.
It has been reported that wage growth will increase by 3 percent. These figures are the fastest recorded since early 2013. However, Reserve Bank is tipping inflation will “probably” reach 4.5 percent by the middle of this year as oil prices soar. Some economists are predicted that it will go as high as 5 percent.
This illustrates that real wages could drop by up to 2.5 percent, which would be the worst hit since the introduction of the GST in mid-2000 when inflation rose to 6.1 per cent and wages grew by less than 4 percent.
“Working people are looking at another year of real wage cuts under the Morrison government which has gone missing in action when it comes to wage growth for working people,” says ACTU secretary Sally McManus.
“You can’t fix cost of living without lifting wages. The Prime Minister could take steps tomorrow to generate real wage growth by agreeing to real pay rises for his own employees, or supporting a significant increase in the minimum wage. Working people are feeling it big time at the moment. Their wages are going nowhere while the costs of essentials – groceries, rent and petrol – are skyrocketing,” continued Sally McManus.
Ms. McManus noted that the $600 hit would be on top of an $800 pay cut in real terms last year for workers on the average salary of $68,000.
“If these optimistic wage growth estimates hold true, the average worker will go backwards by $600 in the first half of this year,” the ACTU said, while pointing out that “52 out of 55 growth estimates issued by this government have over-estimated wage growth. Wage growth has been at record or near-record lows for almost a decade under this government. Wages going backwards have laid the groundwork for the current cost-of-living crisis,” says ACTU secretary Sally McManus.
Soaring global oil prices have led to warnings of an inflation tsunami impacting nearly everything consumers need to purchase, as retailers face increased costs across the supply chain.
Federal Budget Will Include One-Off Payments To Help Reduce The Cost of Living Pressures
It has been announced that low- and middle-income Australians will receive one-off payments to make up for a higher cost of living in a federal budget that will record big improvements to the bottom line.
It is also understood that a tax offset introduced four years ago may be phased out after the current financial year as a possible trade-off.
Among the options will be a cost-of-living bonus payment, targeted at those hit hardest by the steepling price of petrol, groceries, health and housing.
In a recent interview Treasurer Josh Frydenberg said Australian families are the prime targets for budget relief.
“We fully understand that the number-one topic around kitchen tables of Australia is cost of living. And so there will be some relief in this budget,” says Treasurer Josh Frydenberg.
However, Mr. Frydenberg said that any help had to be carefully designed to ensure it does not worsen inflation.
“We don’t want to overheat the economy,” he said, emphasising that any compensation would be temporary. From the start of this crisis, our economic support has been temporary, targeted and proportionate to the challenge we face. We haven’t built in long-term structural spending, we’ve done what has been needed to be done. And again that’s what you’ll seeing in the budget in just over a week’s time,” says Treasurer Josh Frydenberg.