Australian Economy Australian interest rates

Blame the gas cartel, not Aussie wages, for Australia’s inflation woes

Thursday 8 September 2022

Yesterday’s national accounts release for the June quarter showed unequivocally that ‘excessive’ wage claims from workers are not driving the nation’s inflationary pressures. Quite the opposite in fact.

Australia’s real unit labour cost (ULC), which according to the Australian Bureau of Statistics “are an indicator of the average cost of labour per unit of output produced in the economy” and “are a measure of the costs associated with the employment of labour, adjusted for labour productivity”, collapsed 8.3% below their pre-pandemic level in the June quarter of 2022:

Therefore, Australian wages have actually been disinflationary, since real wage growth has been negative while productivity has lifted:

Australian workers' falling economic share

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.