FAQs

1. What is the Wage Price Index and why is it important?

The Wage Price Index measures changes in the price of labor, unaffected by compositional shifts in the labor force, hours worked, or employee characteristics. It is important because it provides a clearer measure of wage movements compared to other indicators like average weekly earnings, which can be influenced by various factors.

2. What is the Employee Selected Living Cost Index (SLCI) and why is it considered a more accurate measure of cost-of-living changes?

The SLCI is a measure published by the Australian Bureau of Statistics that reflects the impact of price changes on the living expenses of selected household types. It is considered more accurate because it models specific household expenditure patterns, providing a more reliable indicator of how cost-of-living changes affect different groups of households in the population.

3. How have real wages in Australia been trending in recent years?

Real wages in Australia have been declining over the past few years, with nominal wage growth not keeping pace with the cost of living. This has resulted in a decrease in the purchasing power of wages, leading to a squeeze on workers’ living standards.

Conclusion

The latest data on Australia’s wage growth shows a nominal increase of 3.2 per cent in the December-quarter 2024. However, when considering the more accurate measure of cost-of-living changes using the Employee Selected Living Cost Index, it is evident that the real purchasing power of wages is still declining. This highlights the ongoing challenges faced by workers in Australia, particularly in terms of maintaining their standard of living amidst rising costs.

It is essential for policymakers and stakeholders to address these issues to ensure that workers are not disproportionately impacted by economic changes and inflationary pressures.