Australian workers are expected to continue to struggle financially until 2040 Rises now exceed inflation – With mortgages squeezing borrowers.
Treasurer Jim Chalmers and new employment secretary Amanda Rishworth praised the strongest real wage increase in five years last week.
“Under labor, more and more Australians are working to earn more and retain more income,” they said.
“Government’s policies are driving strong and sustainable wage growth for workers.
“This is the highest annual real wage growth rate in five years.”
But Leith Van Onselen, chief economist at large enterprises, said Australian workers are still economically regressing since the end of 2023, even as wage levels rise faster than inflation.
He told 2GB that he told 2GB: “Whether you adjust your salary or the cost of living for employees, it’s a very bad situation.”
The unsettling thing is that the actual wages in Australia will not be long. They are not expected to return to their peaks at peaks – for a long time, probably in 2040.
Australian workers are expected to continue to struggle financially until 2040, even if wages rise now exceed inflation – Mortgage repayments squeeze borrowers
His forecast of a decline in living standards until 2040 is based on the Reserve Bank’s forecast for the labor market and inflation.
‘Real wages may not be restored until 2040, which is absolutely extraordinary when you consider it.
“The cost of living crisis after this pandemic is likely to last for years.”
Total wages for the year increased by 3.4%, well above the title inflation rate of 2.4%.
This means that the actual salary has increased by one percent.
“It sounds decent, but the problem is, when you adjust for inflation, Australia’s real wages are still tracking the peak of 6.1% in mid-2020,” said Mr Van Onselen.
Another Australian Bureau of Statistics measure shows that the cost of living for employees climbed 3.4% as of March – the same as the wage price index.
This effectively means that there is no increase in wages for Australian workers to pay off their mortgages or fight high rents, but adjusted for cost of living.
Treasurer Jim Chalmers and new employment secretary Amanda Rishworth praised the strongest real wage increase in five years last week
“In fact, inflation is adapted to other factors that workers have to pay,” he said.
“So something like a mortgage, something like that.
“When you adjust wage growth based on the worker’s cost of living index, it shows that wages after adjusting for cost of living are tracking below 10.2% of the mid-2020 peak. ”
In the June 2020 quarter, the first Covid lockdown was covered, and real wages increased by 2.1%.
As prices fell, annual wages fell by 0.3%, because wages rose by 1.8%.
The cost of living for employees then fell by 2.1%, which means workers’ wages increased by 3.9%, adjusting for living costs.
In Sydney in 2021, a prolonged lockdown of the Ukrainian invasion in 2022 has sent inflation soaring to the last level in 1990.
From June 2021 to December 2023, Australians’ wage cuts lag far behind inflation.
Leith Van Onselen, chief economist at large enterprises, said Australian workers are still economically regressing since the end of 2023, even as wages rise faster than inflation.
Although wages have exceeded inflation for more than a year, the purchasing power of wages has returned to the end of 2011.
“It’s very extraordinary – it shows that Australians have no real salary gains for over 13 years,” said Mr Van Onselen.
“The purchasing power of Australian wages has returned to 13 years ago.
“It’s actually worse than that.”
In the 2010s amid weak wage growth, workers grew in wage growth before the Reserve Bank of Australia raised interest rates 13 times in 2022 and 2023.
Even with the reduction rate of Royal National Issues again on Tuesday, the crisis of cost of living will continue, with inflation returning to its target range of 2% to 3%.
“When inflation drops, it doesn’t mean prices fall, it just means they’re not going to rise as quickly as before,” he said.
“We have lost all this purchasing power over the past few years.”
