Are Workers Wages Likely To Fall In 2022?

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Courtesy of WhiteKnight on Ozpol

Why workers’ wages are likely to fall even further in 2022 Sad
Australian workers’ wages are likely to fall even further in 2022. Here’s why.

News.com.au
December 17, 2021


The expectation the MYEFO update will see a more positive economic position for Australia is not an opportunity for the Morrison government to congratulate themselves on completing the job, according to Shadow Assistant Treasurer Stephen Jones.

Josh Frydenberg has been accused of being blindly optimistic about Australia’s mid-year budget as the opposition warns workers’ wages are likely to fall even further in 2022. Sad

The Treasurer celebrated the outlook of the Mid-Year Economic Forecast on Thursday, stating that falling unemployment would lead to higher wages over the next four years across the country.

But opposition leader Anthony Albanese lashed Mr Frydenberg for his claim, insisting that the purchasing power of Aussie workers was likely to plummet over the coming year.

“This is a Treasurer whose economic strategy comes down to hoping and wishing, it doesn't come down to any actual strategy,” Mr Albanese said on Friday. Sad

“The fact is that real wages have fallen on this Treasurer's watch.

“And the prediction in yesterday's forecast is that they'll continue to fall.”

A drop in real wages means that even if a worker’s overall income goes up, this increase is less than the economy’s rate of inflation meaning the worker’s ability to afford things is actually reduced.


Real wages are likely to continue to fall over the coming year, according to Labor.
Real wages have been falling in Australia since the second half of 2020.

In the June quarter of this year, real wages dropped 2.1 per cent - the largest fall since mid-2001.





But Mr Frydenberg rejected criticisms that his mid-year budget was too optimistic, insisting Australians could expect overall wage to grow 3.25 per cent in 2025.

“Australians can be confident and optimistic about the Christmas period and into next year,” Mr Frydenberg told Sunrise on Thursday.

“Our economy is rebounding more strongly than any other country around the world.”

With inflation factored in, real wages growth will be 0.75 per cent for workers in 2025 according to the Treasurer’s forecast.

Treasurer Josh Frydenberg is optimistic the economy will continue to bounce back.
But Mr Frydenberg’s sunny forecast about Aussie incomes is not the only part of the Treasurer’s new economic predictions lashed by Labor.

Shadow Treasurer Jim Chalmers claims the figures paint too much of a rosy picture of how Australia is tracking, saying they show a degree of complacency from the government.

“Government’s forecasts rely on an assumption that they will get everything right when it comes to the management of this pandemic,” Mr Chalmers told the ABC.

“We hope that the best version of the economy emerges in this recovery.”

Treasury’s forecast is based on the premise that Australia will continue on its path to reopening.

It also counts on state premiers staying the course and not being spooked by a rise in cases.

Labor says the Treasurer’s predictions are blindly optimistic.

Mr Frydenberg noted the uncertainty but insisted there was no reason to believe the economy wouldn’t bounce back.

“So, there is a great deal of uncertainty. No one should understate the fact we‘re still in the middle of a pandemic,” he said.

“Given our track record today with our resilient economy and given the momentum we‘re seeing, I believe there is good cause for optimism.”

The Treasurer said his department had also factored in a doomsday scenario where borders were closed and states went back into lockdown.

“We did model a couple of extra scenarios, au upside and a downside scenario,” Mr Frydenberg told Nine.


Treasury’s forecast is based on the premise that Australia will continue on its path to reopening without any additional large-scale lockdowns.
“In the downside scenario, we forecast that potentially there could be those localised lockdowns. That could hurt the economy to the tune of around $20bn and see unemployment higher than what has been forecast.

“At the same time, we forecasted an upside scenario, where we‘re able to keep the health outcomes under control and that Australians started to spend more than was forecast in yesterday’s numbers.”

Thursday’s update could be the last set of figures released by the government prior to next year’s federal election.