Data from the Australian Bureau of Statistics revealed that the wage growth plunged to 0.4% in the June quarter. It is quite disappointing in view of the statistics in the preceding two quarters, recorded at 0.6%. This is the slowest pace at which the public sector wages are growing in the last 24 years. The sluggish wage growth is also hinting at the looming job losses which will be faced in the coming months. The state of the economy is very delicate and volatile even before the Delta outbreak.
The figures of wage growth in the private sector exceeded only 2% in three categories like construction, ‘other services’, and professional, scientific and technical services. Improvements in the wage growth could only be seen if labour markets buck up but this seems highly unlikely as Australia’s two largest cities are under lockdowns to contain the spread of Covid-19. The suppression in wages will be concomitant to the rising rates of unemployment in the country. Businessmen and entrepreneurs were also downbeat as the wage growth folded.
RBA researchers have found out the income support policies can reduce the effects of joblessness on expenditure. “The fact that some of the consumption losses associated with unemployment are due to income losses points to an important role for unemployment benefits in supporting households through periods of unemployment,” the researchers said.
The good thing about income support policies is that it can increase the income replacement rate during phases of economic distress and financial downwards and also minimises overall consumption losses. Economic thinkers are certain about the rise in unemployment in Australia which they affirmed in the next survey with the east coast being in complete lockdown due to COVID-19 breakouts. Prime Minister Scott Morrison said that he is optimistic about a rebound (similar to what was witnessed earlier this year). The opposition is also calling out the government to take immediate actions for the welfare of the economy and society in general.
Labor’s treasury spokesman Jim Chalmers said that the Morrison administration will keep the wages and cost of living at the same pace and priority. As the cost of living increases faster than the wages, the families are coerced to take tough calls to live sustainably.
The Reserve Bank of Australia, in the prevailing fear of job losses, is writing a new research paper examining the consequences of job losses on the wider economy. Unemployed people on an average decrease their spendings by 9% and the total consumption cuts for up to three years after job loss in the wake of making up for the income losses during the period of unemployment.