Good to see real wages no longer falling, but we have a long way to go

by Greg Jericho


It is now 3 years since real wages have increased

The latest wage price index figures released today by the Bureau of Statistics revealed that wages grew in the 12 months to June by 3.6% – steady with the 3.6% increase in the 12 months to March

The faltering wage growth, which had been increasing of late, was largely due to the drop in private-sector wages which grew by 3.6% in the 12 months to June, compared to 3.7% in the 12 months to March. Public sector wages are finally showing some signs of recovery as the malignant effects of wage caps begin to ease. The public-sector annual wage growth of 3.1% however is the 9th consecutive quarter where public-sector wages have grown by less than wages in the private sector.

But while the nominal annual wage growth has remained steady, one pleasing aspect is that for the first time in 11 consecutive quarters, real wages did not fall. They didn’t rise either, which now makes it 3 years since real wages improved.

Since the September quarter of 2020 there had been 11 consecutive quarters of inflation rising faster than wages. In the June quarter both wages and inflation increased by 0.8%.

But this still leaves real wages some 5.4% lower than they were before the COIVD pandemic hit our shores in March 2020.

The data highlights just how badly workers have been hurt by the rising prices driven by increased profits and supply-side issues that have nothing to do with labour costs. After 3 years it is not only natural but just that workers begin to see some recovery of their lost living standards. Wages should rise by more than inflation, wages should increase in real terms. We are not quite at that point but we are finally seeing signs of workers getting a just reward for the value of their labour.

But with real wages still at levels last experienced in 2009, there is a long way to go to recover what they have lost in the past three years.

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