Wages Stagnate Even Before Delta Impact | Blue Mountain Gazette
New figures show real wage growth was retreating even before the expected tightening of the economy by widespread virus lockdowns.
The economy is expected to contract significantly in the September quarter, with more than half of the population on restrictions.
When asked if Australia can avoid another recession, Prime Minister Scott Morrison told reporters he remains confident that once the country is vaccinated and can open up again, the economy will rebound.
“Once you are able to lift these restrictions, we see the economy come back very, very, very strongly,” he said on Wednesday.
But in the meantime, economists expect Thursday’s labor force figures to show the unemployment rate to rise to five percent in July from a decade-long low of 4.9 percent in June.
Finance Minister Simon Birmingham has acknowledged the east coast closures are having big impacts.
“While there is likely to be an impact on tomorrow’s numbers, we also believe the kind of assistance we are providing will get us back quickly,” Senator Birmingham told 6PR radio.
However, the strong recovery in the job market since last year’s recession has had little impact on wage growth, confirming that a Reserve Bank interest rate hike is still a long way off.
The wage price index – a key guide to wage growth used by the RBA and the Treasury – rose only 0.4 percent in the June quarter at an annual rate of 1.7 percent. hundred.
While it was up from 1.5% in the March quarter, it remains close to the record low of 1.4% seen in the second half of 2020.
It is also well below the current inflation rate of 3.8 percent, indicating that real wages are falling.
“Wages were low long before COVID-19, have remained low during the pandemic, and the reward for Australians who have sacrificed so much to protect each other will be a further reduction in their real wages in the years to come,” said shadow treasurer Jim. Chalmers told AAP.
CUTA President Michele O’Neil said the combined impact of workers with less money to spend, precarious jobs and lockdowns had a devastating effect on the entire community and the community. economy.
Private sector wages rose 0.5% in the quarter, while public sector wages rose 0.4%, the Australian Bureau of Statistics said.
He said that aside from a few isolated examples of skills shortages pressuring employers to meet expected market rates, private sector wage growth in the quarter was generally subdued.
The RBA does not expect the conditions to raise the cash rate by 0.1% to be in place until 2024, which includes wage growth closer to 3%.
Wage growth has not exceeded three percent since the start of 2013.
Meanwhile, there are already signs that the Australian economy will slow down in the coming months due to the lockdowns.
However, at this point, the Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity in three to nine months, is still forecasting annual growth above 2.8% – the long-term trend.
Westpac chief economist Bill Evans expects the sudden impact of virus lockdowns to become more apparent in August.
Associated Australian Press