No signs of a wage-price spiral as wage growth in EBAs stagnate

by Greg Jericho

The latest enterprise agreements lodged with the Fair Work Commission show that wages continue to lag well below inflation

The latest enterprise agreement figures from the Fair Work Commission highlight workers’ difficulty in achieving stronger wage growth.

After two fortnights where the average annual wage growth of agreements lodged with the FWC were 3.4% and 3.8%, the most recent figures continued a mere average annual wage increase of 2.8%. And while fortnightly figures do tend to bounce around, the weighted 3-month average of agreements lodged reveals that with just a 2.9% level. In the fortnight to 16 December, some 18,460 workers in the health and welfare sector would receive an average annual increase of just 2.2% from the agreements lodged.

The average length of the agreements in that sector was 3.1 years – suggesting those workers will face a strong decline in living standards over that time as inflation is expected to remain well above 3% through to the end of 2024.

The data also suggests that concerns over wage-price spirals continue to be massively overblown. The problem with wages is not that they are driving inflation but that they continue to lag well behind.

Once again however the figures also highlight the benefit of being in a union. Union lodged agreements in the fortnight to 16 December averaged annual growth of 4.8%. While this covered only a small number of workers, the weighted average of union-covered agreements over the past 3 months at 3.9% is a full percentage point higher than that of non-union lodged agreements.

The figures highlight that turning around the ship of low-wage growth will take some time, and that without adequate representation and the ability to bargain fairly the task for workers to improve their living standards will continue to be tough.

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