ABS wage price data released today reveals real wages fell by the largest amount on record in Australia last year.
Economists are calling on the RBA to recognise the current inflation is not driven by workers wages, but instead by rising prices as Woolworths and Coles post surging profits today and yesterday.
Real wages in Australia
“Workers are not to blame for rising inflation and interest rates and the RBA should stop blaming people who are doing it tough and start addressing the economic reality: profits are driving the cost-of-living and housing crises,” said Matt Grudnoff, Senior Economist at the Australia Institute.
“To blame workers for current inflation while they experience unprecedented real wage drops and companies post surging profits is economic gaslighting of the highest order.
“This data shows fears of a ‘wage-price spiral’ similar to the 1970s are a speculative fantasy. That story is now itself a risk to the Australian economy. Australians are not living in the 70s. We are falling behind on the cost-of-living in 2023.
“The RBAs obsession with increasing interest rates now risks pushing Australia into a recession.”
Key Points:
Wage growth from Jan-Dec 2022 is 3.3%, lower than the 3.5% forecast
Factoring in surging inflation (7.8%) we have just experienced the largest drop in real wages in Australian history (based on all available data)
The notion of a so-called ‘wage-price spiral’ similar to the 1970s is not based in economic reality.
Real wage growth = wage growth minus inflation
