Australian workers have been hard done by and tax reforms in the budget only begin to return some fairness |
Wages are growing at a much slower pace than inflation, according to the latest data. This fits the story of the budget: that those earning a living off wages have been left behind by those who make their money through investments and tax minimisation schemes such as discretionary trusts.
So I have some good news for the governor of the Reserve Bank, Michele Bullock. She can relax. Because, as has been the case for roughly 35 years, there is no evidence of a wage-price spiral.
In the March quarter, wage growth for the private sector was the slowest it had been since the end of 2024.
Private sector wages grew just 0.76% in the quarter. If that kept up for the next three quarters, annual growth would barely be above 3% – i.e. the top of the inflation target.
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In annual terms, in the year to March, private sector wage growth dropped to 3.2% – the slowest since the middle of 2022:
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At this point, I wish to refer to Bullock’s comments last week where she said she worries we “will end up with higher wage increases and that will feed through into businesses and businesses think, ‘well, that’s now the norm’. That’s the inflation expectations worry that I have”.
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