Workers set to take a real pay cut of 1.5% as inflation surges, RBA boss warns

Philip Lowe says a real wage cut of 1.5% needs to be balanced against $250bn in savings banked by households during the pandemic.Philip Lowe says a real wage cut of 1.5% needs to be balanced against $250bn in savings banked by households during the pandemic.Last modified on Tue 22 Mar 2022 06.20 GMT, Philip Lowe, has warned Australians they are set to take a real pay cut of 1.5% this year because sluggish wages growth won’t meet a surge in inflation.

“Wages are maybe going up high twos, let’s say three, and inflation is 4.5% – that’s a real wage cut of 1.5%, so that will obviously affect people’s budgets.”He said inflation would “come back down again” and the wage cut needed to be balanced against an extra $250bn in savings banked by households during the pandemic, when people’s income was supported through the jobkeeper scheme and spending was limited by lockdowns and travel bans.

He said wages were lagging inflation because of state and federal pay rise caps and enterprise agreements that lock in wage rises at a fixed figure for several years.

Australian companies helped cause this inflation with unsustainable wage increases. This rough acting will force the government to increase rates. And I’m pretty sure the gov hasn’t included the uncertainty of Ukraine️ and now China at our boarder. cryptocurrencies markets

Productivity growth holds the key to resolving the supply bottlenecks and shortages; it is also the missing “ingredient” for the long-waited wage growth.

Watch productivity fall and sick days rise. Employers better get used to staff quitting chasing better pay.

Unions need to start mandating pay rises with not inflation but also taking into account marginal tax rates. An inflation adjusted wage increase is still negative wages after tax

No wage rise for ordinary Australians as long as LNP is in the federal government. Though PM and ministers have never missed a beat in getting pay rises every fiscal year.

We've been going backwards for a decade + Lowe's been saying it for years...every lever the RBA have at their disposal relies on modest wage increases. Not a problem previously as no govt deliberately introduces hardship simply to satisfy their class warfare ideology...a la LNP.

What an absolute peanut. The only institution in the country with the sole responsibility for inflation is simply 'hoping' it comes down.

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