Inflation spirals as workers wages stall

Australian workers struggling to pay their bills and feed their families had to absorb another blow on Wednesday as the inflation rate vaulted to levels not seen in decades.

The Consumer Price Index (CPI) figures released by the Australian Bureau of Statistics (ABS) reveal that inflation has risen to 6.1%, an increase of 1.8% for the June quarter.

As workers face the daunting prospect of further interest rate rises in conjunction with rapidly rising prices, the pressure is on to fix an enterprise bargaining system that has resulted in stagnant wage growth and left Australians exposed to the crippling impact of the cost of living crisis.

Despite the success of the Union movements campaign to provide a 5.2% pay rise for Australia’s lowest paid workers, the struggle to make ends meet is becoming near impossible for millions of wage earners.

ACTU President, Michele O’Neil, said that there is a need for decisive action to deal with the crisis facing workers and their families .

“The need to get wages moving again is urgent. ‘Business as usual’ will not turn this around; it will not fix this.”

“We can’t expect Australians to spend their hard-earned money on discretionary items if they can barely afford the necessities. We need fair and equitable wages and we need them now.”

The rate of growth in the CPI figures is the quickest it has been since the depths of the recession at the end of 1990. According to the ABS, wage growth was stuck at a miserly 2.4% in the first quarter of 2022. These latest inflation figures show that the gap between take home pay and the cost of living is becoming a chasm.

For workers who rely on their cars to get to and from work, the CPI figures are particularly nasty. Transport costs skyrocketed by an eye popping 13.1% as the impact of the Russian invasion of Ukraine continued to be felt.

Inflation will get worse before it gets better,” the treasurer, Jim Chalmers, told a media conference, adding the government assumes inflation will peak “towards the end of this year”.

These price rises are clearly evident to any worker looking to purchase fresh food. Fruit and vegetable prices were up 6% in the June quarter, as the impact of major flooding events along Australia’s east coast has played havoc with growers ability to supply the market.

The Treasurer, and Prime Minister Anthony Albanese will be placing a lot of stock in the Jobs and Skills Summit it has planned for early September. As demands grow to offer genuine, sustained wages growth for workers, talk will have to be backed up substantive action, according to Michele O’Neil.

In real terms, workers have been forced to take pay cut after pay cut in recent years. It’s the result of a decade of coalition governments that made low wages a key feature of their economic plan, a broken bargaining system that has stunted pay rises, and anti-union activity that has left workers vulnerable.

The result is working Australians have lost an entire decade of wage growth, exacerbating an already severe cost of living crisis. In the last year alone, a worker on the average annual income of $69k will have experienced a $2350 pay cut.

Workers are rightly angry that their demands for wage rises is dismissed by some neoliberal economists and commentators as an accelerant as Australia’s inflation spiral continues.

Research from the independent think tank, The Australia Institute proves that to be nonsense. It found that labour costs have played an insignificant role in the recent increase in inflation, accounting for just 15 percent of economy wide price increases while profits have played an overwhelming role, accounting for about 60 percent of recent inflation.

“Working Australians are receiving huge pay cuts in real terms, while big businesses are lining their pockets with record-high profits,” O’Neil said.

Cover photo credit: Viki Mohamad on Unsplash