Greg Jericho, a Guardian columnist and chief economist at the Australia Institute, reports that over the past year, inflation rose faster than wage growth in every single industry in Australia.
Wage Growth Figures
The June quarter wage price index figures showed that in April, May and June, the average growth of wages in the private sector was just 0.7% – the lowest since December 2021. If that pace continued, it would equate to an annual growth of just 2.8%.
Private-sector wages slowed from 3.2% in March to 3.1% in the year to June – the slowest since June 2022. The only thing that kept the overall wage growth steady at 3.2% was solid growth in public-sector wages.
Corporate Profits Rise
Meanwhile, major corporations reported significant profit increases. NAB reported a 5% increase in its profits compared with last year, CBA reported a 7% increase in its cash profit, BHP reported annual profit growth of 9% and Rio Tinto recorded a 47% profit increase in the first half of this year.
The ABS found that in the June quarter, 79% of jobs that got a change in wages had an annual wage growth of less than 4% – the most since 2022, and a sign that the majority of wage growth agreements are at a level more than consistent with inflation of less than 3%.
Real Wages Decline
Jericho notes that the drop in real wages is now at such a point that, even with the RBA's forecasts out to the end of 2028, the best workers can hope for is that in December that year their wages in real terms will be equivalent in value to what they were 17 years earlier. He says the loss of real wages is permanent.
