Wage data: Australian workers suffer cut to real wages adjusted for inflation for first time in two years
Workers have seen their pay levels go backwards compared with inflation for the first time since late 2023, unless they’re a public servant. Labor’s election promise to get wages moving again is looking hollow.
Australian workers have seen their pay levels go backwards and lag behind inflation for the first time in more than two years, calling into question Labor’s promise of getting wages moving again with only taxpayer-funded professionals doing well.
The wage price index edged by up just 3.4 per cent last year as the consumer price index soared to 3.8 per cent, or a level well above the Reserve Bank’s 2-3 per cent inflation target.
Adjusted for inflation, real wages went backwards by 0.4 per cent, marking the first cut to pay levels since the September quarter of 2023 during a period when the Reserve Bank was still planning another interest rate rise.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.“It’s not the steady, consistent growth that would fill households with confidence,” KPMG senior economist Terry Rawnsley said.
The Opposition’s new shadow treasurer Tim Wilson said Labor had failed to deliver higher wages as promised.
“Australians were promised higher wages, instead they’re working harder for less,” he said.
“Labor’s economics settings are baking in weaker incomes and lower living standards for years to come.”
Public servants, however, saw their pay levels soar by 4 per cent, meaning government-funded professionals enjoyed a small 0.2 per cent pay increase, in real terms, during a time of heightened Commonwealth spending.
This occurred as private sector workers, getting a 3.4 per cent increase, missed out as inflation ate up their pay rises. Public sector wages outpaced those in the private sector for the fourth straight quarter.
Low-paid workers are particularly vulnerable with retail wages last year increasing by just 2.9 per cent, meaning a 0.9 per cent cut in real wages.
But healthcare and social assistance workers saw a 4.4 per cent increase, translating into a 0.6 per cent real pay rise, thanks to a 15 per cent pay increase over three years awarded in 2023, financed with $17.7 billion from the Federal Government.
Overall pay levels have now gone backwards in seven of the 15 quarters since Labor came to power in May 2022 on a campaign built around getting wages moving again.
Under the previous Coalition government, wages went backwards for five consecutive quarters from mid-2021, when Sydney and Melbourne were in lockdown and COVID supply constraints fuelled inflationary pressures.
In Opposition, then shadow treasurer Jim Chalmers, industrial relations spokesman Tony Burke and Labor’s deputy leader Richard Marles taunted then Liberal prime minister Scott Morrison about workers suffering cuts in real wages in late 2021, after wages had been outpaced by inflation for the third consecutive quarter.
“This confirms again that Scott Morrison is the Prime Minister for higher prices, lower real wages and working families going backwards,” they said in a February 2022 statement three months before the election that swept Labor to power.
Wages continued going backwards for five full quarters after Labor came to power, during a period that coincided with the Reserve Bank increasing rates 11 times.
As Treasurer, Dr Chalmers spun the latest wage price index result to highlight the wage price index had been above 3 per cent for 14 straight quarters, which in the December quarter was meaningless when it lagged behind inflation.
“While we would have liked to have seen real wage growth, today’s result is better than what we inherited,” he said.
“This is the longest streak of wages growth above three per cent in more than a decade and a half.”
Nonetheless, real wages have only surpassed the 1 per cent level for two quarters since Anthony Albanese became Prime Minister, despite Labor’s multi-employer bargaining laws coming into effect in mid-2023 that were designed to see pay rises replicated across an industry or sector.
Soaring private sector demand and the highest level of government spending in four decades, outside of COVID, have been blamed for Australia’s high inflation levels by both economists and Reserve Bank governor Michele Bullock.
The Australian Bureau of Statistics wages data was released on Wednesday on Mr Wilson’s first full day as the Opposition’s new shadow treasurer.
