Workers still under pressure despite slowing inflation

Rents have increased by their highest annual rise since 2010.

ACTU president Michele O'Neil. Picture: NCA NewsWire / Gary Ramage

The union movement says ­workers remain under “intense” cost-of-living pressure despite ­inflation slowing to 7 per cent in the March quarter.

Although inflation “appears ­finally to have turned a corner” from its 30-year high of 7.8 per cent in the December quarter, the ACTU said inflation was still outpacing wages growth by at least 3.7 percentage points.

ACTU president Michele O’Neil said the latest data showed “the cost-of-living crisis persists for working people”.

“Wage growth is less than half the rate of inflation and prices for essentials are still rising,” she said.

“Working people are still facing huge financial stresses and have waited more than a decade now for their wages to rise.”

Ms O’Neil said the figures should cause the Reserve Bank to reconsider any further interest rate hikes. “More action is ­urgently needed to ensure full employment and job security, along with ending wage theft and rorting of casual and labour-hire arrangements,” she said

The ACTU has applied to the Fair Work Commission for a 7 per cent increase for 2.6 million minimum wage and award-reliant workers from July 1.

The federal government is seeking to limit the inflation-linked rises to workers on the ­national minimum wage and ­lowest award rates.

New research by economists at the Australia Institute’s Centre for Future Work finds a 7 per cent minimum wage rise would have a “virtually undetectable impact on economy-wide prices” while helping tackle the rising cost of living for award-reliant workers.

A briefing paper by the centre’s Greg Jericho and Jim Stanford finds a 7 per cent increase in wages for modern award-covered workers would have no significant impact on consumer price inflation, even if the modest labour costs ­associated with that increase were fully passed on in higher prices.

“A more reasonable scenario would see Australian businesses, which have enjoyed record-breaking profits through the current inflationary upsurge, absorb those incremental labour costs through a tiny reduction in profit margins,” they wrote. “Reducing business profits by just over 1 per cent would fully offset the impact of higher modern award wages on consumer prices.”

They said the surge in inflation had seen many economists and business groups searching for a culprit.

“Rather than look at the companies which actually set ­prices, most concern has been directed towards workers and their wages,” they said.

“That wages have for more than two years now been rising below inflation and thus are axiomatically deflationary, has done little to quell the chorus of those calling for wage restraint.”