Wages continue to reduce inflationary pressures

by Greg Jericho

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The latest enterprise agreements figures show that wages continue to grow in line with long-term inflation targets, and that wages continue to provide a dampening impact on inflation.

In the fortnight to 1 December, 221 enterprise agreements were lodged with the Fair Work Commission, with an average annual wage increase of 3.9%. This is in line with the 3-month weighted average of agreements and down from a peak of 4.2% in October last year.

Even as cost-of-living rises continue to hit workers, there have been no signs of the mythical “wages breakout” that employer groups constantly warn media about, and certainly no sign of a wage-price spiral that the Reserve Bank has suggested we need to be on ever close watch for.

Indeed these figures show that wages continue to have a dampening impact on inflation. In the year to November 2023, inflation grew at 4.3% – higher than the weighted average of EBA wage growth.

These latest figures demonstrate that the Reserve Bank has no reason to raise rates, and was wrong to raise them last November. Not only is there little demand in the economy to reduce, given wages continue to rise by less than inflation further rate rises would only serve to increase the risks of increasing unemployment and a recession.

Workers have never been the cause of the inflation over the past two years, and these latest figures only serve to demonstrate that the fears of “a return to the 1970s” and wage breakouts were ludicrous serfved only to demonise workers.

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