With overall prices increasing by 6.1% and essential items being even more expensive, workers are feeling the pinch
‘In the past year overall prices rose 6.1% – meaning real wages fell 3.3%. Even worse, in the 12 months to June the price of essential items rose 7.6%.’‘In the past year overall prices rose 6.1% – meaning real wages fell 3.3%. Even worse, in the 12 months to June the price of essential items rose 7.6%.’Last modified on Wed 17 Aug 2022 18.32 BSTirst the good news – nominal wages grew faster in the past year than they have since 2014.
In the past year private sector wages grew by 2.7% while the public sector had just 2.4% growth – with education and healthcare growing below average at 2.3% each.The low wages across all sectors is especially poor given unemployment is at 3.5%. This means we have the lowest unemployment rate for 48 years but the highest wages growth for just eight years.Before 2012, wages and unemployment interacted in such a way that with an unemployment rate of 3.5% you would expect wages to grow about 4.3%.
There is little sign of a surge coming. Wages grew just 0.7% in the June quarter – below what is needed to get to 3.0% annual growth, and we would need to see growth well above that to reach the RBA’s estimate by December:But the real problem with wages is that they are growing well below inflation. Even still, the 3.3% overall fall in real wages is the biggest in recorded history . It is larger even than the fall that occurred when the goods and services tax was introduced:
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