The rebound in enterprise bargaining agreement (EBA) wages has stalled, as illustrated by the below chart from Justin Fabo at Macquarie Group:
Union expectations of inflation expectations have also fallen, suggesting EBA wage claims will moderate:
Recent indicators suggest that Australia’s labour market is weakening, meaning there will be less opportunity for workers to negotiate on pay and conditions, meaning lower wage growth.
First, Australia’s workforce is growing at its fastest pace since the late-1970s because of the Albanese government’s record immigration program:
Australia’s civilian population grew by a record 601,000 (2.8%) in the year to September, which is roughly double the pre-pandemic level:
Second, the number of applicants per job ad is tracking above pre-pandemic levels, reflecting lower job demand combined with rapid labour supply growth:
The upshot is that wage growth will inevitably stall amid the flood of migrant workers and the weakening economy:
This is obviously bad news for Australian workers, who have already seen real wages plummet to March 2009 levels after falling 7.5% since June 2020:
Australian real wages will continue to lag inflation for a while yet as the Albanese government’s record immigration program stokes inflation (e.g. via rents) and suppresses wage growth.
