Workers tipped to miss out on a decent pay rise until 2025 – but it’s good news if you have a home loan
- Treasury expecting below-average pay increases to continue until at least 2025
- Australian wages growth hasn’t been above average 3 per cent since early 2013
- Budget papers are predicting unemployment falling below 5 per cent by 2022
- Lower jobless rate between 2006 and early 2009 coincided with big pay rises
- But Treasury not expecting lower unemployment to boost salary levels this time
Australian workers are set to miss out on a decent pay rise until at least 2025 – but it’s good news for home borrowers.
Wages have been at below-average levels under 3 per cent since 2013.
The long streak of lousy pay increases is set to continue for at least another four years with Treasury Budget papers predicting wages growth of just 2.75 per cent in the 2024-25 financial year.
Salaries last year grew by just 1.4 per cent and pay levels for 2021-22 aren’t expected to improve with wage increases of just 1.5 per cent forecast.
Australian workers are set to miss out on a decent pay rise until at least 2025 – but it’s good news for home borrowers
During the September quarter of last year, wages growth slowed to a record low of 0.1 per cent.
Following the new Treasury forecasts, ACTU president Michele O’Neill said the Budget had failed to properly tackle weak wages growth.
‘We’ve got a crisis in wages in Australia,’ she told the ABC.
Reserve Bank of Australia governor Philip Lowe has repeatedly vowed to keep the cash rate at a record low of 0.1 per cent ‘until 2024 at the earliest’.
As recently as December, Treasury forecast unemployment peaking at 7.5 per cent by March 2021 only for the jobless rate to sink to 5.6 per cent – the lowest since the onset of the pandemic.
A record 13.077million people are now in work with job vacancies at a 12-year high.
Treasury is expecting unemployment to fall to 5 per cent by June 2022 and to 4.75 per cent by mid-2023.
Lower unemployment usually coincides with decent wages growth but not this time.
The long streak of lousy pay increases is set to continue for at least another four years with Treasury Budget papers predicting wages growth of just 2.75 per cent in the 2024-25 financial year. Salaries last year grew by just 1.4 per cent and pay levels for 2021-22 aren’t expected to improve with wage increases of just 1.5 per cent forecast.
Between May 2006 and January 2009, Australia had a jobless rate below 5 per cent and above-average wages growth above 4 per cent, Australian Bureau of Statistics data showed.
Property prices are vastly outperforming pay increases, with Sydney’s median house prices in the year to April surging by 10.4 per cent to $1.147million, making property an even more distant prospect for young Australians.
Treasurer Josh Frydenberg announced a Budget deficit of $106.6billion for 2021-22 making up 5 per cent of GDP.
Last year, he unveiled a Budget deficit of a downwardly revised $161billion that comprised 7.8 per cent of gross domestic product, the biggest share of the economy since World War II.