How Aussies on the dole are about to bank a pay bump – as Treasurer says most workers will suffer a cut to real wages for at least another year
- JobSeeker set to have increased by $38.30 in 2022 to compensate for inflation
- Indexation on March 20 and September 20 to compensate for consumer prices
- ANZ is expecting the unemployment rate to fall even lower to just 2.9 per cent
- Treasury is expecting inflation to hit 32-year high of 7.75 per cent by late 2022
- But expected wages growth in 2022-23 of 3.75 per cent is much lower than that
Australians on the dole are being compensated for surging inflation as most workers effectively suffer pay cuts that are expected to continue until 2024.
Centrelink benefits like JobSeeker are indexed on March 20 and September 20 each year to keep pace with inflation.
But those with a job aren’t so lucky, with Treasury now forecasting real wage cuts for at least the next the middle of next year.
Treasurer Jim Chalmers has revealed his department is now expecting inflation to surge to a 32-year high of 7.75 per cent by the end of this year, as wages this financial year grow by just 3.75 per cent.
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Australians on the dole are set to have receive $38 extra a fortnight to help them deal with surging inflation as bosses struggle to get staff (pictured is a Centrelink queue on the Gold Coast in 2020)
JobSeeker increase to match inflation
Australians on the dole will receive $38 extra a fortnight to help them deal with surging inflation with most workers now tipped to suffer real wage cuts for two years.
What the unemployed will be getting
SEPTEMBER 20: A $25.10 fortnight increase in JobSeeker to $667.77 to cover 3.9 per cent combined inflation rise over March and June quarters
MARCH 20: They had a $13.20 fortnightly increase to $642.70 to cover a 2.1 per cent combined inflation increase in the September and December quarters of 2021
JobSeeker for a single person with no children went up by 2.1 per cent, or $13.20, on March 20 to $642.70 a fortnight, to compensate the unemployed for inflation surging in the September and December quarters.
JobSeeker is rising by another 3.9 per cent, or $25.10 on September 20 to $667.77, to cover inflation rising over the past two quarters.
Over six months, the unemployed would have seen their fortnight benefits rise by $38.30.
ANZ expects 2.9 per cent unemployment
The ANZ bank is now expecting the jobless rate to plunge to just 2.9 per cent in the March quarter of next year for the first time since 1974, down from an existing 48-year low of 3.5 per cent.
Senior economists Felicity Emmett and Catherine Birch are expecting unemployment, now at 3.5 per cent, to fall to the low threes by the end of 2022.
ANZ is also expecting the participation rate to rise from 66.8 per cent to a record high 67.1 per cent by the March next year.
With bosses are struggling to recruit staff, ANZ is now predicting the jobless rate will fall to 2.9 per cent by the March quarter of 2023 for the first time since August 1974 (pictured is a Melbourne bank branch)
‘The upward trend in participation seems largely driven by pull factors, such as it being easier to find a job in a strong labour market and more flexible/remote arrangements reducing barriers to employment,’ the bank said.
This contradicts Treasury, which is expecting unemployment to rise as the Reserve Bank of Australia keeps raising interest rates to contain inflation.
It had the jobless rate rising to 3.75 per cent by June 2023 and 4 per cent by June 2024.
High inflation means pay cuts
Dr Chalmers said high inflation eroded the buying power of workers.
‘More Australians are in jobs than ever before – and that’s a very welcome outcome – but fewer Australians are feeling confident about the choppy waters our economy is in,’ he told Parliament.
Treasurer Jim Chalmers has revealed his department is now expecting inflation to surge to a 32-year high of 7.75 per cent by the end of this year, as wages this financial year grow by just 3.75 per cent. Real wages are expected to fall until 2023-24
‘Because they see the impact that high inflation is having on their living standards – in an environment where workers aren’t getting wage rises sufficient to match price rises.’
The consumer price index soared by an annual pace of 6.1 per cent in the June quarter, the fastest increase since 2001.
When the historic one-off effect of the GST being introduced was taken out, this was the steepest increase since 1990.
Treasury is now expecting headline inflation to hit a 32-year high of 7.75 per cent by the end of 2022 and not fall back within the Reserve Bank’s 2 to 3 per cent target for another two years.
Treasury is expecting wages growth of 3.75 per cent in 2022-23.
But it didn’t expect real wages to start growing again until 2023-24, by which time inflation would have fallen back to 2.75 per cent, within the Reserve Bank’s 2 to 3 per cent target.
Treasury is expecting real wages to fall until 2024 as pay levels fail to keep pace with surging inflation (pictured is a hospitality worker at The Rocks in Sydney)
That means low-paid workers, whose pay went up on July 1, are set to effectively suffer real wage cuts until 2024.
Those on awards only received a 4.6 per cent pay increase from the Fair Work Commission.
Even a 5.2 per cent increase in the minimum wage, the most generous since 2006, won’t be nearly enough for Australia’s lowest-paid workers as their pay lags behind inflation.
Australia’s wage price index has been stuck below the long-term average of 3 per cent since mid-2013 but was at just 2.4 per cent in the year to March.