Australia’s soaring cost of living is outstripping wage increases, leaving the average worker more than $800 worse off in 2021, the steepest cut in real terms for more than 20 years, according to Australian Council of Trade Unions president, Michele O’Neil.
The contraction in spending power happened during Covid supply chain shortages, while Russia’s invasion of Ukraine has only propelled prices of fuel and food higher.
In a speech to the Australia Institute on Tuesday, O’Neil will say a worker on the average income of $68,000 last year effectively had a pay cut of $832 as price increases overwhelmed any meagre wage increases. In 2021, consumer prices rose 3.5% and wages 2.3%, the ABS said.
“Shockingly, it is actually worse for the workers who have been on the frontline keeping the country going during the pandemic,” O’Neil will say, citing ACTU analysis showing employees in healthcare and social support saw their real pay shrink $967 last year.
Staff in transport, postal and warehousing – who were “risking their health and safety to keep the nation running” – went backwards by $1,497, education and training workers by $1,362, while those in admin and support services shrank by $1,185.
Wage rises have consistently undershot budgetary forecasts even as unemployment rates have fallen. Researchers blame the weak growth in part on increased casualisation of work, giving employees less clout when they bargain with bosses.
“The cost of living issue has been compounded by nine years of low wage growth, continued attacks on workers’ rights and conditions, and the increases under this government of casual and insecure work,” O’Neil will say, adding the wages forecast would be “the most important element” in the government’s 2022-23 budget due 29 March.
Australia has 2.4 million casual workers with millions more on labour hire, fixed-term, or sham contracting arrangements, “or suffering under other corporate strategies to cut their wages”, she said.
Qantas flight attendants, for instance, faced a “staggering” $27,000 cut in annual salary if the airline succeeds in ripping up their enterprise agreement, O’Neil will say.
Treasurer Josh Frydenberg, though, said he wouldn’t “take lectures from the unions or the Labor party on wages”, adding that when Labor was last in office, real wages were falling and unemployment was rising at 5.7% compared to 4.2% now.
The government’s tax cuts had seen more than $29 billion flow to 11.5 million Australians since the onset of the pandemic, “ensuring hard working Australians keep more of what they earn”, Frydenberg said. Household disposable income had remained strong, rising 11.1% on pre-pandemic levels, or more than the 4.4% increase in prices over that time.
However, Mike Sadler, a former IT technician retraining to be a primary school teacher, feared the looming price hikes would stretch his family’s budget more than during the pandemic.
“If you stay at home, you don’t go out and don’t see anyone, and your kids don’t go to other people’s birthday parties, you can actually survive in this town,” said Sadler, 61, who shifted his family out of Sydney to the Riverina town of Wagga Wagga several years ago to seek lower-cost housing to match their limited budget.
The Covid supplement has now gone, petrol prices were “unbelievable”, and rising prices meant the family has had to find extra savings such as giving up fresh potatoes for the cheaper frozen chips sold in a local supermarket.
“We’ve really been squeezed,” Sadler said. “I feel it’s going to get harder.”
The Food and Agriculture Organisation was among international agencies warning of more to come. The United Nations agency last week predicted food and feed eaten by livestock would rise as much as 22% above their already elevated prices.
Global #foodprices rise to record high in February, led by vegetable oils & dairy products.
— FAO Newsroom (@FAOnews) March 4, 2022
The @FAO Food Price Index averaged 140.7 points in Feb, up 3.9% from Jan, & 3.1 points higher than in Feb 2011.
World wheat & maize production seen rising in 2022https://t.co/PPgoW3NqMO
Assuming the disruptions are prolonged, “the global number of undernourished people could increase by 8 to 13 million people in 2022-23, with the most pronounced increases taking place in Asia-Pacific, followed by sub-Saharan Africa, and the Near East and north Africa”, the FAO said.
Head of RaboResearch in Australia, Stefan Vogel, said markets had largely taken into account the disruption to Ukraine’s wheat crop but not the spring-sown crops of sunflower seeds and corn. Increases in the prices of these crops could follow.
Australian farmers weren’t necessarily going to be big beneficiaries, though, with fuel and fertiliser costs rising more quickly than prices for some products.
Crop prices “have moved higher but not anywhere close to [those in] Europe or the US”, he said. Energy prices, meanwhile had doubled in a year while fertiliser prices were 90% to 160% higher.
Vogel expects the impact on food prices to be sustained, not least because energy prices were likely to stay high as supply disruptions and sanctions linger even if the war were to be halted in the near term.
“I think the grain market has to work through this [shock] not only in the next two months, but probably the next two years,” he said.
