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Wage Increases Beat Inflation Over 2023 (Read 378 times)
whiteknight
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Wage Increases Beat Inflation Over 2023
Mar 11th, 2024 at 12:57pm
 
Wage increases beat inflation over 2023, ending real pay cuts   Smiley

ABC News
Feb 21 2024



In short: The Wage Price Index shows base pay went up 0.9 per cent in the December quarter and 4.2 per cent over the year.
That marginally exceeded the consumer price rise of 4.1 per cent over the year to December, meaning employees saw a small annual real pay rise for the first time since March 2021.
What's next? The Reserve Bank will consider the strength of wage growth when it holds its next interest rate setting meeting in mid-March.
Australian workers enjoyed a real annual pay increase last year for the first time in almost three years, data from the Australian Bureau of Statistics (ABS) show.

The Wage Price Index (WPI) shows average base pay rose 0.9 per cent in the December quarter, leading to an annual increase of 4.2 per cent over 2023.

Both the quarterly and annual increases exceeded inflation, which came in at 0.6 per cent in the December quarter and 4.1 per cent for the year to December, according to the Consumer Price Index (CPI).

The last time annual wages growth exceeded annual inflation was the March quarter of 2021.

The 4.2 per cent annual wage growth is the best recorded since March 2009, also 4.2 per cent.

Economists surveyed by Reuters typically expected base pay packets to increase by 0.9 per cent in the December quarter and 4.1 per cent over the past year.

The good news for workers is that most economists expect wage growth to remain around this level for the rest of the year.

"The labour market is starting to slacken, which will ultimately weigh on wage growth," noted Sean Langcake from Oxford Economics Australia.

"But there is a good deal of catch-up growth to come through the wage-setting system, and the labour market still remains in a tight position.

"We expect WPI growth will remain around this quarter-on-quarter pace of 0.8-0.9 per cent through 2024."

Public sector pay catch-up boosts wage index
The economy-wide pay increase was boosted by public sector workers, who saw their biggest quarterly pay rise in 15 years after many jurisdictions dropped or loosened wage cap policies.

"Higher growth in the public sector was primarily due to newly implemented enterprise agreements for essential workers in the health care and social assistance and education and training industries following changes to state-based wages policies," noted ABS head of price statistics Michelle Marquardt.

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Public sector wages were up 1.3 per cent in the quarter and 4.3 per cent over the past year, seasonally adjusted, edging out private sector pay rises of 0.9 and 4.2 per cent, respectively.

Abhijit Surya from Capital Economics said that was a slight fall in annual private sector wage growth from the previous quarter.

"The share of jobs in the private sector that received a pay hike fell to just 16 per cent in Q4 [fourth quarter], down sharply from 49 per cent in Q3 and from 21 per cent in Q4 2022," he noted.

"And with the sharp increase in award wages behind us, the average pay increment for those who did receive one fell to 4.4 per cent in Q4, down from 5.8 per cent in Q3, although still above the 4.0 per cent figure recorded in the year-earlier period."

Mr Surya said the Reserve Bank will be focused much more on private sector wage moves, as those are both more sensitive to interest rates and also have a greater impact on the Consumer Price Index, which the RBA is trying to get back to annual growth of 2.5 per cent.

"While wage growth won't fall below 4 per cent until the second half of the year, an improvement in productivity growth means that it should nonetheless be consistent with inflation returning to the RBA's 2-3 per cent target," he added.

"The upshot is that we're sticking with our view that the RBA is done hiking rates."

'Encouraging numbers' or 'thin edge of the wedge'?
Treasurer Jim Chalmers said the numbers were "very welcome and very encouraging" with real wage growth returning ahead of Treasury forecasts, while accusing the Liberals of overseeing "a decade of deliberate wage suppression and stagnation" while in government.   Sad

A close up of Jim speaking in a suit and orange tie outside a building during the day.
Federal treasurer Jim Chalmers says real wages were falling 3.4 per cent when Labor came into office.
"This is the first time since 2018 we've seen three consecutive quarters of real wages growth," he observed.   Smiley

"Since the election, nominal wages have been growing at an annualised average of 4.0 per cent, compared to 2.2 per cent for our predecessors. 

"This is a substantial turnaround in just 18 months."

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whiteknight
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Re: Wage Increases Beat Inflation Over 2023
Reply #1 - Mar 11th, 2024 at 1:01pm
 
However, the opposition argues that living standards have fallen further under the Albanese government and, according to new analysis released by the Australian Financial Review, real household incomes are not expected to recover to their pre-pandemic levels until 2027.

Shadow Minster for Employment and Workplace Relations Michaelia Cash argued the government's recent changes to industrial relations laws threatened to undermine long-term wage growth and employment.


Michaelia Cash says recent industrial relations reforms could result in higher inflation and/or higher unemployment.
"Business groups have warned that the radical changes to our workplace relations system will do absolutely nothing to improve Australia's lagging productivity. Improving productivity is the only way we can have sustainable wage increases," she said.

"The Albanese government is making life more difficult for the job creators of Australia by imposing more regulation, complexity and ultimately costs. These costs will be passed on to consumers or result in the loss of jobs – or both."

Innes Willox
Ai Group chief executive Innes Willox warns that increasing employment red tape will hinder productivity improvements.(ABC News: Sean Warren)
Innes Willox, the chief executive of employer advocate the Ai Group, echoed that sentiment.

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"Beyond the economy-wide measures of wage rate growth, the very large wage increases emerging in particular areas of the economy present additional concerns over the direction of wages under the government's new workplace relations arrangements," he argued.

"The concerns are two-sided: they introduce new rigidities and new sources of red tape that will make it more difficult to achieve productivity improvements in individual workplaces and they have opened up additional scope for wage increases unrelated to productivity improvements.

"There is a real risk that the high wage increases we are now seeing in parts of the economy are the thin edge of a very damaging wedge."
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whiteknight
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Re: Wage Increases Beat Inflation Over 2023
Reply #2 - Mar 11th, 2024 at 1:06pm
 
Shadow Minster for Employment and Workplace Relations Michaelia Cash argued the government's recent changes to industrial relations laws threatened to undermine long-term wage growth and employment. 
I wonder is any of this secret code for wage cuts?.   Sad
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Laugh till you cry
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Re: Wage Increases Beat Inflation Over 2023
Reply #3 - Mar 11th, 2024 at 2:24pm
 
Wage increases totally thrash and stomp on productivity gains which are almost non-existent.

In some industries productivity will be decreasing.

Quote:
Labour productivity growth has slowed in Australia since the mid‑2000s. In the decade to 2020, Australia's productivity growth was the slowest in 60‑years. Average productivity growth over the past 20 years to 2021–22 is around 1.2 percent.
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John Smith
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Re: Wage Increases Beat Inflation Over 2023
Reply #4 - Mar 11th, 2024 at 2:44pm
 
Laugh till you cry wrote on Mar 11th, 2024 at 2:24pm:
Wage increases totally thrash and stomp on productivity gains which are almost non-existent.



and profit growth? Roll Eyes Roll Eyes
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whiteknight
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Re: Wage Increases Beat Inflation Over 2023
Reply #5 - Mar 11th, 2024 at 5:15pm
 
Profits outpace wages as productivity up: time for workers to be fairly rewarded
Media Release - March 6, 2024 ACTU. 
New data from the ABS today reported the Australian economy grew 0.2 per cent over the final three months of 2023, and 1.5 per cent over the year.

Company profits have again outpaced wages this quarter with non-mining profits in December 2023 up 6.2 per cent compared to December 2022, while wages only increased 4.2 per cent over the year, as measured by the Wage Price Index.

The data also revealed that workers are spending more on essential items than this time last year (up 1.2 per cent), and less on discretionary items than this time last year (down 1.6 per cent). This is against a backdrop of growing corporate profits, with profit share increasing to 27.1 per cent, up from 26.8 per cent in September.

Market sector labour productivity rose 0.6 per cent in the quarter and 1.3 per cent over the year, the second consecutive quarter of positive quarterly growth and the first quarter of annual growth since June 2022. Workers worked similar hours to last quarter, suggesting gains were driven by increased output per hour worked.

Quotes attributable to ACTU Assistant Secretary Liam O’Brien:

“Profits continue to drive inflation with profits again outpacing wages growth. This data reminds us yet again that Australian workers are not getting their fair share of the wealth they are creating.

“The ABS data suggests that the growth in productivity has come from workers working harder, but wages are not keeping pace with the mega profits’ companies are posting. Unions will continue to campaign to ensure workers get the rewards their hard work deserves”.
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Frank
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Re: Wage Increases Beat Inflation Over 2023
Reply #6 - Jun 4th, 2024 at 3:38pm
 
whiteknight wrote on Mar 11th, 2024 at 1:06pm:
Shadow Minster for Employment and Workplace Relations Michaelia Cash argued the government's recent changes to industrial relations laws threatened to undermine long-term wage growth and employment. 
I wonder is any of this secret code for wage cuts?.   Sad



The Federal government forged on with its socialist experiment via the industrial relations legislation in the full knowledge that what they were doing was undertaking unprecedented actions at the time of a Reserve Bank squeeze on the economy. Albanese was either oblivious of the dangers or did not care. He had once chance to deliver for ALP financiers, unions, and took it.

Meanwhile, the numbers under rent and mortgage stress are increasing as it spreads into what were affluent areas. In Victoria, the tax attack on holiday homes and landlords is relentless and the number of unsold holiday homes grows. The number of investment properties decline.

In this calm before the storm, companies are realising they have three choices – lower profits; increase prices to maintain margins or become more productive through retrenchment our better organisational structures. If it is to be the third choice, then the impending IR legislation means action must be swift. Telstra showed the way.

Accordingly, given there is increased nervousness now about lifting prices, the period of sitting back and waiting and see what happens will not last long. Boards will require management to act. My guess is that on August 26 when the industrial relations act comes into operation will make August the month when companies that can’t lift prices will stop sitting back and watching and will take action. There will be a wave of retrenchments of some magnitude.

Banks warn us that if unemployment gets to five per cent (it’s currently around 4.1 per cent) then we will see falling property prices and a much deeper crisis. That would leave the way open for an interest-rate cut later this year.

But as I have pointed out many times our interest rates are significantly lower than the US and other developed countries, so if we are not careful our dollar will be the subject of a market raid if we cut interest rates too far. This week, we are seeing Japan’s central bank supporting the yen because traders have been hitting the currency. Australia is a much better target.

ROBERT GOTTLIEBSEN 
BUSINESS COLUMNIST
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Re: Wage Increases Beat Inflation Over 2023
Reply #7 - Jun 4th, 2024 at 11:35pm
 
The vast majority of jobs are provided by Small Businesses.

A large number of Small Businesses are finding conditions really tough at the moment. High power prices shop rents and cost of goods is killing them.

I reckon there is going to be a significant increase in the unemployment numbers later this year.  Sad
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Re: Wage Increases Beat Inflation Over 2023
Reply #8 - Jun 5th, 2024 at 12:51am
 
whiteknight wrote on Mar 11th, 2024 at 1:06pm:
Shadow Minster for Employment and Workplace Relations Michaelia Cash argued the government's recent changes to industrial relations laws threatened to undermine long-term wage growth and employment. 
I wonder is any of this secret code for wage cuts?.   Sad


Massive Real but Hidden Unemployment and Part-time Jobs pretending to be jobs....

Need more tradies to build them houses.... well - what a surprise.....  they can live in tents or forty to a room until the developments are finished and the profits in, just at the point where the business 'fails' leaving the bosses with millions and banks with losses that they then foist on the general public via fees and charges...

Anyway - what difference will any house building make when most of it will be grabbed by 'investors' and home owners will be left out in the cold again......


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