Reserve Bank boss on $1million a year tells bosses to ‘avoid’ giving workers a pay rise because of the inflation crisis
- RBA Governor Philip Lowe opposed calls to hike workers’ pay due to inflation
- Dr Lowe said it was ‘best to avoid’ pay increases as the cost of living will rise
- The RBA Governor was slammed for his comments on social media
- Users referred to Dr Lowe’s $1m salary and claimed his view was incorrect
Reserve Bank Governor Philip Lowe has opposed calls to give workers a pay rise – as he warns the cost of living is going to continue to surge.
That statement – which comes after inflation surged to a 32-year high of 7.3 per cent over the 12 months to September, and is forecast to get even worse by the end of the year – has sparked fierce debate, with critics noting Dr Lowe pockets $1,076,209 plus benefits.
During a meeting on Tuesday night, Dr Lowe said that now was not the time to grant pay increases to workers.
‘If we all buy into the idea that wages have to go up to compensate people for inflation it will be painful, so best avoid that,’ he said.
Reserve Bank Governor Philip Lowe (pictured) has opposed calls to increase wages and gave a sombre warning about inflation
Dr Lowe, who is paid $1,076,209 a year, claimed that it was not the right time for employers to give worker pay increases (stock image)
‘The issue that many central banks have been worried about – and I include us in this – is this period of high inflation leads the workforce to say: ‘Well, inflation’s high – I need full compensation for that.’
Dr Lowe argued that if employers decide to provide wage increases it would only make the cost of living worse.
‘If that were to happen, what do you think inflation would be at next year? Seven per cent, plus or minus (a bit).
‘And then we’ve got to get compensated for that seven per cent… and this is what happened in the ’70s and ’80s. It turned out to be a disaster’.
He added that if the country can get through the tough period then inflation would eventually come down. But he did not speculate how long that will take.
Dr Lowe’s comments were slammed on social media, with many claiming the he was targeting regular Aussies who were struggling and was out of touch.
‘According to our head of the Reserve Bank, it’s regular Australians getting a pay rise that would lead to higher inflation. It beggars belief the he would say that,’ wrote one commentator.
‘Poor Philip Lowe only earns a measly $1,000,000. I don’t know how he manages.’
Another said: ‘Philip Lowe is absolutely out of touch, this guy earns over $1,000,000 & he tells us to be thankful for a pittance in wage rises as inflation might rise.’
A third said: ‘Philip Lowe’s comments regarding wages is economically, mathematically & intellectually incorrect.’
‘Suggesting wage increases are the cause of inflation is the most disingenuous bulls**t EVER uttered.’
Governor Philip Lowe (pictured) hinted borrowers could cop 0.5 percentage point rate increases again, like they did in June, July, August and September this year
The RBA Governor was slammed for his comments over social media as Aussies struggle with bills and mortgage repayments
Dr Lowe warned in that same meeting that super-sized interest rate hikes could return should inflation continue to spike.
Governor Philip Lowe hinted borrowers could cop 0.5 percentage point rate increases again, as they did in June, July, August and September, and raised concerns about a possible ‘price-wage spiral’.
‘Given our mandate for price stability and full employment, the board expects to increase interest rates further over the period ahead,’ he said.
‘We have not ruled out returning to 50 basis point increases if that is necessary.’
Borrowers since May have been dealt with seven consecutive monthly interest rate rises, but the most recent increases in October and November were in smaller, 0.25 percentage point increments.
This has taken the RBA cash rate to a nine-year high of 2.85 per cent, with economists and financial markets expecting more pain to come.