Australia’s workers have lower real incomes than they did in September 2013 — and they will plunge further after yesterday’s shocking inflation result for the December quarter.
According to Australian Bureau of Statistics data, the seasonally adjusted private sector wage price index (WPI) has risen 16.6 percentage points between December 2013, the first quarter after Tony Abbott was elected, and December 2021. But CPI has risen 16.8 points in the same period, meaning workers have gone slightly backwards in real terms.
Even if we round that up to zero, those numbers are before tax, which means workers are significantly out of pocket in terms of cash in hand.
And with yesterday’s 2.1% inflation rise in March, it means ordinary workers will need a truly stunning wages surge to go close to breaking even in real terms for the March quarter. Even a shock 1.5% WPI rise for the quarter would leave workers on lower real pay than they were when Kevin Rudd lost to Abbott — the last WPI number, for December, was 0.7% quarter on quarter and 2.35% for the whole of 2021.
That WPI number will be released on May 19, just three days before the election — which could turn out to be very appropriate timing.
And under Prime Minister Scott Morrison, workers have made no headway in the three years since the December 2018 quarter, and will end up deep in the red after the March quarter numbers are determined.
This means Morrison will be the first prime minister to see wages materially go backwards on his watch. Since John Howard (the WPI series began in 1997) most prime ministers have presided over inflation and wages coming out about equally. The best performer was Julia Gillard, who oversaw cumulative real wages growth of 0.3% in total. If Morrison loses on May 21, he is likely to leave office with the worst record of all.
Yesterday’s result means that the government’s March economic forecasts for wages are already in danger of becoming irrelevant.
The budget forecasted CPI growth of 4.25% over 2021-22, which means there will need to be a major fall in inflation, to virtually zero, in the current quarter to meet the target. The government is attempting to engineer that fall with its cut in fuel excise (on top of falls in the oil price), but mitigating against that will be a rise in housing costs driven by the expected increase in interest rates for homeowners.
What’s noteworthy about yesterday’s inflation data — and what will alarm the Reserve Bank — is how widespread price rises were. Although housing and fuel led the rises, food, health and education — all crucial items in the household budget — also rose strongly, showing that both goods and services and tradeable and non-tradeable areas of the economy are affected.
Whether the RBA moves next Tuesday or waits a month, there’s no doubt workers with mortgages now face the nightmare scenario of their purchasing power falling materially while mortgage repayment costs increase — and most likely by amounts large enough to inflict real damage on family budgets.
In other countries, workers have banked significant real wage increases since 2018. US workers enjoyed consistent real wages growth from before the pandemic and through it to late 2021, when inflation began rising. UK workers saw significant real wages rises in 2019 and early 2020, and real wage growth — despite surging inflation — has endured even in recent months. This means US and UK workers have a buffer against real wage declines inflicted by the current round of inflation, and also rising interest rates.
Aussie workers, however, have already suffered nine years of zero growth, and are about to lurch backwards in the biggest inflation shock since the GST was introduced.
Nine years of zero wage growth by the ATM governments. Deliberately stunting wage increases was/is their policy. Mathias Cormann admitted it.
Didn’t it all start with Howard ?
That together with high immigration was all to enable the suppression of wages. It worked !!!!
falling wages are not an accident they are Morrisons’ policies to increase profits for his big business mates made possible by the importation of tens of thousand 457 visa worker low wage slaves who make competition for Australian jobs harder and put downward pressure on wages, that’s why scomo is desperate to get the borders fully open so he can start bringing them back and continue his aim to introduce his U.S style working poor trickle-down ideology to Australia.
Not just Scomo. A Treasurer Chalmers will implement the 235,000 mass migration target with just as much gusto as Treasurer Frydenberg. Under either party, you are looking at wage stagnation and rising unemployment.
Not if one uses and understands population data. 235k of undefined ‘mass migration’ is <2% of the working age population which has already passed the ‘demographic sweet spot’, but are important taxpaying i.e. PAYE cohort to support increasing numbers of retirees/pensioners (created a top heavy population pyramid due to increasing longevity).
So we restrict immigration severely for fewer taxpayers, then more skill gaps emerging as baby boomers retire and we create a ‘hostile environment’ for ‘migrants’ (mostly international students, NZ’ers & backpackers), collapse the tax base, services, govt. and taxes; ‘libertarian trap’ with the nirvana of privatised Medicare, fewer public services, access to them and no unions to support wage rises…..
Now we know for sure why smoko was/is happy for the continueing
deaths of pensioners; that means less paid out to a shrinking group
and he doesn’t care how families feel about premature deaths of their
parents and grandparents. For Morrison it’s a win win situation.
Morrison to my way of thinking has the American view on wages.
The smarter ones earn big dollars whilst the underclass survive day to day on a meagre salary.
And become debt slaves.
Then you must agree that this government, especially the PM&C are vastly overpaid
considering their lack of intelligence, i tegrity and honesty oh, and work ethic.
while Morro, Frydo, and Birmo out there every day repeating th elie that the LNPO are the best / better money managers and punters should stick with them – “very unfa=safe to make a move at this difficult time, that onl we ( the LNP) is capable of handling .. . . What a crock!
“Our PM is indeed a great money”manager that statement is true, unfortunately he only manages the economy for his mates like the Greedy Grandma and the Fat coalminer and the 45 other mates who earn more than the 7.7million poorest Australians at the bottom of the financial system .
We now have an opportunity to change our government and many people are undecided as to who to vote for . When making any choice Australians often rely on the “pub test” the pub test involves listening to the pros and cons of a debate and then making a decision based on the presented argument . At this point, we consider the integrity of the proponents and their past history .
Our PM is loose with the truth, to say the least, in fact, a list of well-known people including the French PM ,his own deputy Barnaby Joyce and other members of his own party say they know he is a liar So when you cannot differentiate between his lies and the truth is he fit to lead our nation?
PS
In the nine years of the coalitions lies and rorting ,depending on sources members of this government have increased their wealth dramatically. The PM may have increased his net wealth from single-digit Millions to over $40 million dollars .Not bad for someone whose CV lists a number of disasters and early departures such as Tourism Australia and Tourism New Zealand. Both these departures were accompanied by comments involving an unacceptable management style with a lack of consultation with other stakeholders.
About time for those who know the truth like Fran Bailley and others to tell the truth about how taxpayer’s money was spent .
I received a very welcome and unexpected $250 in my bank account yesterday. It had a “Cost of Living” description in my account. I’ve been employed full time for the last 7 months but I do have a pensioner confession card due to my advanced age that I didn’t think was valid due to me working full time.
It going to take a bit more than $250 to bribe me to vote LNP. About $2000 should do it.
If they slip $250,000 into my account, I might consider…….nah, maybe not.
I got the $250, car repairs ate that up also had to buy a tyre.
You think they will reimburse me for the tyre another $160 + $250?
Would still not vote for them, but just wondering!
We’ve all got our price – unlike theirs, this mob couldn’t afford mine.
All the money in the world would not make me vote for this mob. I can’t be bought.
…. And whatever happened to “30 pieces of silver”? Inflation?
I’ll do the dirty for 176 pieces of silver in the form of the round 50 cent piece. Please note I’m in a seat listed as marginal.
When i was a union delegate i was constantly calling for 5% pay rises but the powers to be did not want to rock the boat as they were always looking at tax creep and the members could not see the benefit over time, so now we are to the point we are in now with wages going backwards. But then again what would i know I an just some dumb fool who worked for a living with minimal formal education so what would i know.