New Data Shows Decline in Real Wages in Australia

Today, the Australian Bureau of Statistics released the latest Wage Price Index for the September-quarter 2024, showing that while nominal wages grew by 3.5 per cent, the real purchasing power of workers decreased. The Employee Selected Living Cost Index, a more accurate measure of cost-of-living increases, indicates that real wages fell by 1.2 points. This decline in real wages is contributing to a shift of national income away from wages to profits, with productivity growth outpacing real wage growth.

FAQ

What is the Wage Price Index?

The Wage Price Index measures changes in the price of labor, providing a cleaner measure of wage movements unaffected by compositional shifts in the labor force or employee characteristics.

What is the Employee Selected Living Cost Index?

The Employee Selected Living Cost Index is a more accurate measure of cost-of-living changes for specific groups of interest in the economy, such as households reliant on wages and salaries.

How has real wage growth trended in Australia?

Real wage growth in Australia has been on a downward trend, with workers experiencing sharp declines in the purchasing power of their wages. The gap between productivity growth and real wage growth continues to widen, leading to a redistribution of national income towards profits.

Conclusion

The latest data highlights a concerning trend of declining real wages in Australia, despite nominal wage growth. Using the Employee Selected Living Cost Index as a measure of cost-of-living changes reveals that the real purchasing power of workers is diminishing. As productivity growth outpaces real wage growth, the shift of national income towards profits persists. It is essential to consider more accurate measures of cost-of-living and productivity when evaluating the true impact of wage growth on workers in Australia.