Falling real wages at the centre of cost-of-living crisis

Treasurer Jim Chalmers claimed last week that the average Australian worker is $3,700 “better off” than a year ago, citing this as proof that Labor in government has delivered on its promise to “get wages moving again”. The West Australian newspaper called it “Labor’s wages growth win”. Other media headlines could almost have tricked you into thinking that workers are getting richer right now.

News flash: we’re not. The latest figures from the Australian Bureau of Statistics show that nominal wages growth has been 3.6 percent in the past year. That’s “strong and sustainable wage growth” according to the treasurer. But wages have been outpaced by inflation, which is 6 percent. So real wages have fallen 2.4 percent. Combine this with skyrocketing mortgage payments from interest rate hikes, and the cost-of-living pressures on many households are intense.

It couldn’t be more obvious to anyone who’s on an average wage: workers are getting poorer at the expense of big businesses, which are raking it in. Inflation-adjusted wages in Australia have declined for almost three years, and they’re now at their lowest level since 2009.

The bosses think this is great. Multimillionaire property developer Tim Gurner faced some backlash for saying the quiet part out loud when he told the Australian Financial Review Property Summit: “We need to see pain in the economy”. But the Reserve Bank has been saying the same thing non-stop all year, along with big business lobby groups. They say workers should feel the pain, that unemployment should rise and that wages should be held below inflation in the interests of business profits.

The idea that Labor’s mild industrial relations changes might give gig economy workers the right to a minimum wage is enough to send the Business Council of Australia into a fit. Billionaire lobby groups are given space in the media to tell us that the very idea of a minimum wage for food delivery drivers is dangerous. We’re told that any real wage increases would only lead to higher prices. But when wages are held down, corporations jack up prices anyway.

What are unions doing about this? Besides the occasional press release lamenting cost-of-living pressures, most trade union leaders are not even demanding that wages rise above inflation. Instead, union leaders have spent the past year signing below-inflation pay deals with the bosses, rather than fighting for workers’ living standards to improve.

This do-nothing approach from unions means that there has been no substantial challenge to the attacks on working-class living standards, even though the combination of low unemployment and high profit margins puts workers in a strong position to fight back.

Falling real wages are at the centre of the cost-of-living crisis. To turn this situation around will require determined class struggle against big business and the rich.