Treasurer Jim Chalmers says wages are higher under Labor as OECD notes falling living standards

The OECD has called out Jim Chalmers for suggesting Australians are getting higher wages under Labor.

With the Coalition trailing One Nation in multiple opinion polls, the Treasurer has been out there spruiking the benefits of union-endorsed multi-employer bargaining where pay rises can be replicated across workplaces in a sector like they were in the 1970s and early 1980s.

Apparently, conservative and right-wing parties can’t be trusted to deliver pay rises because wages only grow under Labor governments.

“Under Labor, Australia has the lowest average unemployment of any government in half a century, smaller deficits and less debt than the Coalition left us, booming business investment, with tax cuts and higher wages that the right-wing parties oppose,” Dr Chalmers said in an embargoed statement this week.

Only that since Labor’s Secure Jobs, Better Pay laws came into effect in June 2023, high inflation has been eating up those pay rises.

So much for Labor claiming to be the champion of low-paid workers in female-dominated sectors like aged care.

This means declining living standards because workers can’t buy as much with what they earn.

Australian workers have effectively been suffering some of the biggest cuts in real wages during the past five years, among the 38 countries in the OECD.

Wages, adjusted for inflation, have plunged by 5.1 per cent when the March quarter of 2026 was compared with the same time in 2021.

Australia was among just a handful of countries where real wages had been falling by more than 2 per cent during the past five years, with this small list of shame including New Zealand, Czechia, Denmark, Italy and Sweden.

“Nevertheless, real wages have regained some of the lost ground in virtually all OECD countries — real wages are near the trough of the cost-of-living crisis only in New Zealand and Australia,” the OECD said in its employment outlook report.

Across the OECD, average real wages in member countries had still edged up by one per cent over five years despite the aftermath of COVID, and the oil shocks from Russia’s Ukraine invasion in 2022 and this year’s US-led war with Iran.

But in Australia, wages are lagging behind headline inflation.

Australia’s wage price index of 3.3 per cent in March was well below the 4.6 per cent consumer price index, meaning a real wage cut over the year of 1.3 per cent during a quarterly reporting period that covered the months before the Iran war.

Workers have been suffering a real cut in their wages since the September quarter of last year, when inflation again soared above the Reserve Bank’s 2-3 per cent target.

This revived a nightmare that had lingered from early 2021 until the September quarter of 2023 when inflation was outpacing wages growth, during another Reserve Bank rate hike cycle.

Productivity, or what’s produced from labour and capital, declined by 0.6 per cent in the March quarter, continuing a chronic economic problem that’s plagued Australia for the best part of a decade.

Higher wholesale costs are simply passed on to customers, leading to higher inflation.

The prospect of rising unemployment from more Reserve Bank of Australia interest rate rises, to tackle price pressures, is only likely to see workers continue to suffer more cuts in real wages during a prolonged oil crisis.

“In the future, geopolitical uncertainties and a time-limited increase in energy costs may significantly weaken labour markets while exerting further upward pressure on inflation, which likely will depress wages,” the OECD said.

During the Coalition’s nine years in office, inflation had mainly been under the RBA’s target band, being consistently at sub-three per cent levels from July 2014 until the end of March 2021.

Wages growth wasn’t great, but workers were still getting small real increases in their pay.

During a Middle East conflict, Labor is looking foolish as it politicises wage increases only to deliver nothing.

Except the prospect of a wage-price spiral as emboldened unions seek pay increases that outpace inflation like they did during another oil crisis in the 1970s.