We all got a pay rise on July 1 — as we do every year — and new data shows wages are growing faster than they have been since 2014. But if it sounds too good to be true, it usually is.
The bad news today is thanks to Australia’s extraordinarily high inflation rate of 6.1 per cent, forecast only to grow, our ability to buy things fell harder in the past year than it has since the Australian Bureau of Statistics’ records started in 1997.
That means even though wages are technically rising, we’re all still effectively losing money because wages compared to inflation are still well behind the cost of living. And it’s currently worse than expected.
Let’s break this down.
The ABS released data on Wednesday that showed wages grew 2.6 per cent in the previous financial year, 2021-22. It’s the first time they’ve grown by more than 2.5 per cent since 2014.
But there’s another layer to this bad news trifle because while that sounds good, historically 2.6 per cent wage growth is shocking. The rate of wage growth has been steadily declining for years and took a massive hit due to COVID in 2020. But the pandemic is definitely not to blame. Even during the global financial crisis wage growth in Australia was between 3.5 and 4.5 per cent.
Yesterday’s data measured wage growth before the Fair Work Commission’s significant minimum wage rise of 5.2 per cent was handed to Australia’s most vulnerable workers this financial year. And thanks to this rise the Reserve Bank of Australia said it expected wages to grow by 3 per cent by the end of this year.
So some good news? No.
Guardian Australia reported that we’re not actually on track to hit 3 per cent, and even if we do it’s nowhere near good enough.
The 5.2 minimum wage rise was intended to keep step with rising inflation, but in the last month alone inflation has already overtaken it.
In the past year prices of goods and services rose by 6.1 per cent across the board and the the price of essential items rose 7.6 per cent. The cost of essential items has risen 9.6 per cent since the start of the pandemic.
Depending on your income and your household spend, this means “real wages” (a term used to describe wages adjusted for inflation) have dropped around 3 to 4 per cent in 12 months. Actually what the fuck.
This is the biggest fall in real wages on record since the Australian Bureau of Statistics first measured wages growth in 1997.
Real wages are now back at 2012 levels, but are set to fall further.
— Greg Jericho (@GrogsGamut) August 17, 2022
State by state the worst-off Aussies lived in WA. Their real wages fell an average of 4.4 per cent in the past year. NSW was the best of a bad bunch with a drop of 2.5 per cent in 12 months.
And the cherry on top is that earlier this month the Reserve Bank predicted wages compared to inflation wouldn’t start to pick up until at least June 2024.
On the plus side, lettuce is slightly more affordable now as flood-stricken crops bounce back so hooray for salads I guess.