Ever feel like your pay cheque is being stretched further and further these days? Like things are becoming more expensive and you’re stuck with the same, shitty, semi-empty wallet?
Turns out that it’s probably not your horrible spending habits. According to the Australian Bureau of Statistics, wage rates in the private sector rose by only 1.9 per cent in the past year to March. Combined with the public sector, it’s a growth rate of just 2.1 per cent, the slowest rate since they started tracking growth in 1997.
Some measures even hint that our current wage growth is the slowest since the 1960’s. No wonder we’re finding it increasingly harder to hit that 20 per cent property deposit.
Yesterday, the Reserve Bank of Australia suggested a boost in wage growth would come within two years, forecasting lower unemployment and a lift in economic growth.
“In addition, information from the Bank’s business liaison suggested that firms generally had been unwilling to make offers of wage growth below two per cent,” said the RBA in the minutes of their May 3 meeting.
The RBA uses wage growth as a key factor in their forecast for price inflation, which influences interest rate decisions. The latest cut to a historic low of 1.75 per cent was pushed largely by a desire to boost economic growth.
The bottom line is that wages are only just keeping up with inflation. So while you might have been taking home a decent pay packet each week (you may have even scored a little pay-rise), your buying power is probably low due to the pushing up of costs.
While the RBA is optimistic that wage growth will pick up in a couple of years, it won’t be a fight they’ll win easily. Feeling a little overconfident, perhaps?
Still confused? Here’s a little explainer on how currency works.