Australian wages have stagnated for the past seven years, reaching record levels in the first half of 2020.
The Treasury expects wages to rise 1.25 percent this fiscal year and 1.5 percent in the next fiscal year, but the consumer price index is expected to rise 3.5 percent and 1.75 percent over the same period. It actually means that wages will not keep pace with the cost of living.
In 2023 and 2024, wage growth and inflation are expected to increase at a similar rate, before wage growth exceeds inflation in 2025. The super-guarantee is legislated to increase by 0.5 percentage point per year. year from July 1 to 2025.
“Obviously [super guarantee rises] are still people’s income, but they’re getting great, ”Dr. Kennedy said. The Treasury’s assumption that about 0.7 to 0.8 percent of the super hike is traded with wages is consistent with the analysis of the Reserve Bank and the Grattan Institute.
But unions, Labor and super funds all say there is no guarantee that employers would provide an equivalent pay rise if the hikes were removed.
The federal government and several senior economists have raised the link between supers and wages as a reason why future increases should be carefully considered in light of the economic circumstances of the time.
“The Treasury has once again reminded Australians that the super pay is pay,” said Senator Bragg. “Wage growth will be devoured by super above forecast estimates.”
Superannuation spokesman Stephen Jones said the argument was a “triumph of theory over the reality of work.” One in five workers were casual workers with no bargaining power and a quarter of the workforce’s wages were determined by sentence, he said.
“So tell me, who are these workers who were going to get a 0.5 percent pay rise on July 1?” [without the super guarantee]? ” he said. “You will have a hard time finding them. This may be true for executives and professionals, but it is not true for everyone. “
Liberal MP Tim Wilson said it was “an obvious truth that the cost of employment breaks down into wages and super and the higher the super the more wages to pay and vice versa.” He said that charging super to be higher “just robs young Australians of their pay to save a first home deposit.”
Dr Kennedy also told the Economic Committee that three main factors influence wage growth, including the slowdown in the labor market, inflation expectations and productivity growth.
The Treasury recently downgraded the unemployment rate needed to see a significant increase in wages between 4.5 and 5 percent. The RBA has suggested that a rate below 4% is needed to help raise inflation and does not plan to hit its target rate until 2024.
“Wage growth may respond more quickly to a drop in the unemployment rate if we start to see a mismatch between the skills employers are looking for and those looking for work.”
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