The latest Melbourne Institute survey showed that actual wage growth remained subdued in June:
Source: Macquarie Macro Strategy
Expected wage growth over the next 12 months is also subdued:
Source: Macquarie Macro Strategy
Whereas inflation expectations have also fallen sharply, pointing to slower wage growth ahead:
Source: Macquarie Macro Strategy
The actual and expected slowing in wage growth makes sense in the context of the collapse in job ads and the sharp rise in applicants per job ad amid record immigration:
As noted this week by Yarra Capital chief economist Tim Toohey, “net migration is currently supplying 1.4 people for every new job created”.
This is obviously bad news for Australian workers who have already experienced the sharpest decline in real wages in recorded history, which wiped out 14 years of gains:
To add further insult to injury, the May federal budget projected that real wages would only recover to December 2014 levels by mid-2028:
This would mean that by mid-2028, Australians will still have lost around 14 years of progress in their living standards.
Moreover, based on the projected trajectory, it could take around a decade before real wages recover to their mid-2020 peak.
