The Reserve Bank’s November Statement on Monetary Policy reveals just how badly Australian workers are being hit by the current weak growth in wages and fast rising inflation.
In August the Reserve Bank was anticipating that wages in the 12 months to December this year would rise at 3.0%. This has now been increased to 3.1%. That would suggest a better situation for workers, but unfortunately, the RBA has increased its estimate for inflation for the same period from the 7.8% it had in August to now 8.0%. That represents a real wage fall of 4.54% compared to its estimate in August of 4.45%.
All up the new estimates out to the end of 2024 suggest that real wages by December 2024 will be 2.2% lower than they were in June this year. That is again worse than the 1.8% fall estimated in August.
But comparing real wages from June this year misses out on the massive falls that have already occurred. By the end of 2024 the Reserve Bank now estimates that real wages will be some 5.4% below where they were in March 2020 just before the pandemic occurred.
It means that at the end of 2023 workers will on average only be able to buy the same amount of items and services with their wage as they were 15 years earlier in December 2008.
Twelve years of real wage growth will have been wiped out in 3 years due to 14 consecutive quarters of prices rising faster than wages – a truly awful collapse of living standards.