Wage Growth Slows as Inflation Eases
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VOCABULARY LIST
Wage growth (noun phrase) /weɪdʒ ɡroʊθ/
The rate at which workers' salaries increase over time.
Example: Wage growth has slowed to 3.2% this year.Interest rate cut (noun phrase) /ˈɪntrəst reɪt kʌt/
A reduction in the percentage charged on loans by the central bank.
Example: The RBA introduced an interest rate cut to help stimulate the economy.Bargaining power (noun phrase) /ˈbɑɡənɪŋ ˈpaʊə/
The ability of workers or unions to negotiate better wages or conditions.
Example: Workers have lost some bargaining power as wage growth slows.Public sector (noun phrase) /ˈpʌblɪk ˈsɛktə/
The part of the economy controlled by the government, including jobs in education, health, and public services.
Example: Public sector wage growth was lower than expected this quarter.Disposable income (noun phrase) /dɪˈspoʊzəbl ˈɪnkʌm/
The money a person has left to spend after paying taxes and essential expenses.
Example: With inflation easing, disposable income is increasing for many Australians.Cost of living (noun phrase) /kɒst əv ˈlɪvɪŋ/
The amount of money needed to cover basic expenses such as housing, food, and transport.
Example: Wage growth needs to keep up with the rising cost of living.Economic conditions (noun phrase) /ˌɛkəˈnɒmɪk kənˈdɪʃənz/
The overall state of the economy, including inflation, employment rates, and growth.
Example: Economic conditions will determine whether wages continue to rise.Labour market (noun phrase) /ˈleɪbə ˈmɑkɪt/
The supply and demand for workers, affecting employment rates and salaries.
Example: A tight labour market usually leads to higher wages.Go up (phrasal verb) /ɡoʊ ʌp/
To increase in amount, price, or value.
Example: Wages have gone up slightly, but not enough to match inflation.Catching up (phrasal verb) /ˈkætʃɪŋ ʌp/
Making progress to reach a level that was previously lost or delayed.
Example: Wages are finally catching up with inflation after years of stagnation.
ARTICLE
Australian wages have grown at their slowest pace in over two years, despite unemployment remaining low. This signals a shift in the job market and could influence future interest rate cuts.
Wage Growth Slowing
According to the Australian Bureau of Statistics (ABS), wages rose 0.7% in the December 2024 quarter, falling short of the expected 0.8%. Over the past year, wage growth has slowed to 3.2%, down from 4.2% in December 2023.
Oxford Economics’ Sean Langcake said the figures would be welcome news for the Reserve Bank of Australia (RBA). “Wage pressures are easing, which means lower inflation and supports the recent rate cut,” he explained. He expects further softening in the job market over 2025.
Private vs Public Sector Wages
Private sector wages have been slowing throughout 2024, with average increases now at 3.7%. “This suggests workers have less bargaining power than a year ago,” Langcake noted.
Public sector wage growth was lower, at 0.6% in Q4, partly due to strong increases earlier in the year. AMP economist My Bui said the trend shows wage growth is stabilising after rapid increases in 2023.
What This Means for Workers
Despite slowing wage growth, inflation is also cooling, meaning workers’ real wages are improving. “This isn’t all bad news,” said Bui. “Slower wage growth is balanced by rising disposable income and better consumer confidence.”
However, wages still have a long way to catch up with price increases over recent years.
Sectors Driving Wage Growth
ABS head of price statistics Michelle Marquardt said health care, social assistance, manufacturing, and construction were the biggest contributors to wage growth. However, the proportion of jobs seeing wage increases was the lowest in a December quarter since 2019.
The Australian Council of Trade Unions (ACTU) pointed out that real wages have risen more in the past 12 months than they did over nine years under the previous government. ACTU President Michele O’Neil credited this improvement to union efforts and new government policies supporting collective bargaining and fair pay.
Looking Ahead
While wage growth is slowing, inflation is also easing, meaning many workers are finally seeing real improvements in their pay. However, the pace of future wage increases will depend on economic conditions and government policies in the coming year.
SOURCE:
This article is based on: https://www.news.com.au/finance/work/careers/welcome-news-for-the-rba-wages-growth-falls-in-line-with-inflation/news-story/4db178d749dfa55ee44456a2ecff1a62
