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  • The level of public housing needs to return to previous levels

    The level of public housing needs to return to previous levels

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on June 1, 2023

    Australia needs more housing, and we definitely need more public housing

    There is rarely a debate in Australia that generates more heat than housing. The causes of housing unaffordability and the solutions to it are varied and often get bogged down in power plays and political scaremongering. But as policy director Greg Jericho notes, building more homes is a pretty obvious solution, and more public housing needs to be at the forefront.

    The NSW Productivity Commission this week released a report into housing in NSW that recommended “Building more homes where people want to live.” To this end it suggested raising average apartment heights in suburbs close to the CBD, allowing more development near transport hubs and encouraging townhouses and other medium-density development.

    All of this is worthy. And if combined with the reform of the negative gearing and the capital gains discount will do much good.

    But the report noted that “New South Wales experienced a 45% surge in priority applicant households on the social housing register, with 6,519 priority social housing applicants waiting for assistance as at 30 June 2022”. And yet it did not mention public housing or any social housing solutions at all.

    In the past public housing was a much greater share of Australia’s housing market.

    In 1983 14 public housing building approvals were made for every 100 private sector ones. Now it’s 1.7:100.

    The level of new housing per head of population has fallen and it is thus little wonder that house prices have risen beyond the means of many.

    We need more housing and we desperately need more public housing.

    In the 2019 election campaign, the ALP pledged 250,000 new houses over 10 years. That has now become 30,000 over 5 years under the proposed Housing Fund. It is time for more ambition from the government and more housing for low and middle income earners.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Profit-Price Spiral an Inconvenient Truth for Big Business: Economists

    Profit-Price Spiral an Inconvenient Truth for Big Business: Economists

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    Despite a mainstream shift in the national conversation away from baseless claims of a “wage-price spiral”, some big business proponents and conservative economists appear unwilling to accept the economic evidence of a profit-price spiral.

    New media reports today quoting former Australian Competition and Consumer Commission Chair Rod Sims have reaffirmed the findings of Australia Institute research showing excess profits from companies like Coles and Woolworths are significant contributors to inflation.

    Key Points:

    “That the business lobby has been unable to disprove a single number from our research is a testament to the careful, evidence-based nature of our work,” said Dr. Jim Stanford, Director of the Centre for Future Work and report author.

    “It’s notable that many of the voices now seeking to cast doubt on the evidence behind a profit-price spiral were silent during the prolonged rhetoric on the existence of a wage-price spiral.

    “The report ‘Profit-Price Spiral: the Truth Behind Australia’s Inflation’ contained new macroeconomic data confirming that increasing profit margins per unit of real output in Australia’s economy account for a strong majority (over two-thirds at that time, based on September quarter 2022 data) of above-target inflation since the outbreak of the COVID pandemic in early 2020. The data we presented on the surge in profits, coincident with rising inflation, is clear, sourced to ABS data, and has not been challenged.

    “The RBA’s internal correspondence about our report (released as part of a freedom of information request) in fact replicated and verified our finding that rising profit margins account for the bulk of increased nominal valuations in Australia, comparing end-2019 to late-2022.

    “Macroeconomic trends since then (including December quarter 2022 data released after our initial report) confirm that unit profit margins are still elevated.

    “Contrary to the view of some Australian commentators, numerous high-quality research reports from think tanks, universities, and even central banks in other countries have confirmed the importance of rising profit margins in explaining the acceleration of inflation since the COVID pandemic, using methodological approaches similar to our own statistical decomposition. We cited several of those complementary studies in our follow-up report, Profits and Inflation in Mining and Non-Mining Sectors, and other similar research has been published more recently.

    “The main thrust of the critical commentary on our report has not been to challenge its empirical findings on the rapid increase in profits, but rather to deny that any generalised increase in profitability has been the cause of the inflation. Some claim that the rise in profits has been limited to the mining sector, which somehow doesn’t ‘count’ – even though products produced by that sector (including petrol, gas, and other fossil fuels) have been a leading source of recent inflation.

    “Our subsequent research showed that profit margins have also increased (albeit less dramatically) in several non-mining sectors. Others claim that swollen profits are just a side-effect of inflation that was caused by other forces (usually including supposed excess wage growth or consumer disposable incomes). That debate over the direction of causation is rather moot: the undeniable reality is that profits are at all-time record levels in Australia, while workers’ real wages continue to decline.

    “Business peak bodies who argue for continued wage suppression desperately want to hide the reality that they have profited from the inflation that is causing a crisis in living standards. This explains their interest in trying to challenge our findings.

    “The Australia Institute stands by its research. Arguing about the dimensions, causes, and remedies of the inflation problem is a normal part of the national economic debate. We look forward to similar scrutiny being applied to those arguing that wages are driving inflation in Australia.”


  • Workplace Law Reform Must Limit Cancer of ‘Gig Work’ in Care Economy: Research

    Workplace Law Reform Must Limit Cancer of ‘Gig Work’ in Care Economy: Research

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    New research reveals the growth of ‘gig’ employment in the NDIS and care sector is undermining minimum employment conditions for tens of thousands of workers, with thousands of workers likely earning below-award wages, missing out on superannuation and experiencing inferior WHS protections and gender pay equality outcomes.

    Researchers have recommended limits are placed on the growth of gig work in the NDIS as part of the third tranche of the Commonwealth Government’s industrial relations reforms later for later this year. Researchers say the promised reforms to ‘Employee-like’ forms of work should be used to protect minimum employment standards and quality service delivery for care workers and consumers.

    Key findings

    • The gig work model is growing in the care economy and NDIS, undermining wages, conditions and gender pay equality
    • Care workers on platforms are younger, less experienced and more likely to be migrant workers than workers in the broader care and support workforce.
    • Platform care work is insecure on-demand work, working time is fragmented, pay can be unpredictable. Many workers’ earnings are equivalent to below award-level pay.
    • Worker-friendly flexibility is limited and is mainly only possible in short hours jobs. Flexibility comes at the expense of a living wage.
    • Care and support platform workers are isolated and largely invisible, working in private homes without organisational supervision, support, guidance or training.
    • In platform and other independent contracting arrangements, risks and responsibilities for care quality and client safety are devolved to individual workers.
    • Platforms compete by avoiding the costs and risks of business fluctuations, of employing workers and of accountability for care and support quality and safety. Costs and risks are devolved to low-paid and insecure frontline workers.
    • Platforms profit from retaining funds that are allocated for employong workers and providing training and supervision.

    “Unregulated gig work is a cancer for workers rights in Australia,” said Dr Fiona Macdonald, Policy Director, at the Australia Institute’s Centre for Future Work.

    “The growth of gig work on digital platforms in the care economy eats away at minimum employment conditions and shifts risk on to care consumers and staff.

    “Care is a public good. Stopping the gigification of disability and aged care workforces is necessary to prevent public funding allocations for essential workers’ wages, superannuation, training and supervision from being diverted to profits.

    “Sector-specific reforms are currently being considered for the road transport industry. Yet, in the public care and support sectors, the same concerns—safety, sustainability and viability—are being approached through disconnected policy processes, rather than being addressed head on.

    “The Women’s Budget Statement reiterated the Government’s commitment to ‘a sustainable and productive care and support economy that delivers quality care and decent jobs’. Gig care work should be addressed with a view to gender equality.

    “We are seeing the Gigification of care work and, without protections, we will risk seeing this spread to other sectors of the labour market.”

    Recommended policy responses:

    • The Government has committed to reforms to ‘Employee-like’ forms of work in 2023
    • These reforms must be designed to restore full employment rights and benefits to all care and support workers, including minimum wages, super & WHS
    • Comprehensive employment minimum standards should apply for all care and support workers, regardless of employment status
      Digital platforms in the care sector should be bound by mandatory codes of conduct

    Related research



    Unacceptable Risks



    Full report

  • Real wages falls and interest rates rises signal tough times for households and the economy

    Real wages falls and interest rates rises signal tough times for households and the economy

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 25, 2023

    You can’t sustain household spending while real wages continue to fall, and households are starting to let everyone know

    The Australian economy – like all economies – is about people. And yet too often company profits are used as a judge of economic health. Throughout the pandemic and in the years since, company profits have soared while the real wages of workers has fallen. This situation is inherently unsustainable with an economy dependent upon household consumption. As policy director Greg Jericho writes in his Guardian Australia column, we are beginning to see households struggle to keep going.

    The Budget delivered this month by Treasurer Jim Chalmers revealed that the next financial year starting in little over a month is set to be one of the worst in the past 40 years. Household consumption is expected to rise just 1.5% – the 5th worst since 1985-86. Even worse if we account for an expected 1.7% rise in population this means in a per capita sense, real household spending is about to fall.

    And when household spending slows, so too does the entire economy.

    We have already see the beginnings of this with sharp slowing in the volume of retail spending being done, all while the amount of money we are spending rises. In effect we are paying more for less. This means the “nominal” figures in the retail trade data hides the weakness in the economy and the pain households are going through.

    With mortgage repayments rising nearly 80% in the past year, households are switching from spending in shops and on services that employ people, to paying off their loans – driving up the profits of banks ever more, but in doing so actually slowing the economy.

    The Reserve Bank is getting what it wanted – a slowing economy, less money being spent and rising unemployment.  But with conditions only seen in recessions expected in the next year, the risk that this slowing will lead to the economy stopping completely is rising, and the Reserve Bank must not raise rates any further and be extremely mindful of the pain they have already caused to households struggling from the fastest increase in loan repayments in over 30 years at the same time as real wage fall faster than they have on record.


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  • Wages are growing solidly but real wages continue to plummet

    Wages are growing solidly but real wages continue to plummet

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 18, 2023

    Wages are growing the best they have for 11 years, but real wages are now back at the level they were 14 years ago

    The good news of the strongest wages growth since 2012, writes policy director Greg Jericho, in his Guardian Australia column, is tempered by the fact that real wages have fallen back to levels last seen in early 2009.

    The 3.7% growth in the wage price index demonstrates that workers are finally seeing some return for the tighter labour market in which unemployment is at around 50-year lows. It also reflects that public servants are also becoming free of the wage caps over the past decade that had purposefully kept wages down.

    In the March quarter for the first time in more than a decade, public-sector wages grew by 0.9%. Private-sector wages have also grown above 0.75% for 4 straight quarters – the first time since September 2012.

    But even with this very good wage growth, workers are seeing their living standards fall. In real terms, wages fell 3.1% in the past year and are now 5.4% below where they were before the pandemic. This destruction of purchasing power will take many years to recover. And it highlights that wages should rise faster than inflation and with workers being the ones who have suffered the most from inflation, they should not be expected to suffer once inflation is back within normal ranges.


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  • Don’t worry about a budget surplus, worry about a slowing economy

    Don’t worry about a budget surplus, worry about a slowing economy

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 11, 2023

    Rather than be a budget that will fuel inflation, the budget is actually closer to austerity than stimulation

    The Budget announced this week by Treasurer Jim Chalmers revealed a projected surplus in 2022-23 before returning to a deficit in the future years. In response many commentators and economists have suggested that the budget is therefore expansionary and will fuel inflation. But as policy director, Greg Jericho notes in his Guardian Australia column given the projected slowing economy, if anything the budget should be more expansionary.

    Most of the claims around the budget fueling inflation are based on the movement of the budget from surplus in 2022-23 to deficit in 2023-24. And usually, this would suggest that the government is stimulating the economy. But when we look at the actual figures within the budget, the overwhelming reason for the shift from surplus is due to parameter changes relating to oil, gas, coal and iron ore prices. The spending measures the government is proposing are hardly expansionary at all. Their direct impact on total household income is minimal, and the largest spending is on reducing medical and energy bills rather than directly giving households more money.

    When we look at the forecasts for public demand growth we see a level of expansion that is more akin to an austere budget than one attempting to stimulate the economy.

    But when we also look at the forecasts for economic growth over the next two years we see an economy slowing quite abruptly in a world that is teetering on a global recession. In the past, such weak forecasts for household spending and GDP growth would have seen governments spending more and lifting economic growth.

    This budget appropriately deals with the concerns of inflation by directly lowering the costs of energy and medical bills – it demonstrates that governments do have a role to play in lowering inflation and that it need not be done purely by the traditional view that the government must slow the economy. The economy is already projected to slow, and by this time next year the calls will likely be less about why the budget is not in surplus and more about what is the government doing to simulate the economy


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    Commonwealth Budget 2025-2026: Our analysis

    by Fiona Macdonald

    The Centre for Future Work’s research team has analysed the Commonwealth Government’s budget, focusing on key areas for workers, working lives, and labour markets. As expected with a Federal election looming, the budget is not a horror one of austerity. However, the 2025-2026 budget is characterised by the absence of any significant initiatives. There is

    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Affordability of a Liveable Jobseeker Payment is a Non-Issue

    Affordability of a Liveable Jobseeker Payment is a Non-Issue

    by Brett Fiebiger

    Brett Fiebiger

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    Commonwealth on Track for Diminutive Deficit or Surplus in 2022-2023

    In the lead-up to its 2023-24 budget, the Labor Government finds itself in an awkward position, accepting that the Jobseeker payment is “seriously inadequate” and an impediment to regaining work, yet professing that it lacks the financial capacity to afford a meaningful increase anytime soon.

    The Economic Inclusion Advisory Committee’s (EIAC) April 2023 Interim Report recommended raising Jobseeker from 70% of the Pension up to 90%. The current Jobseeker base rate for a single person with no children is $693.10 per fortnight. Lifting it up to 90% of the current Pension payment of $971.50 per fortnight would provide the unemployed with an extra $181.25 per fortnight (or $12.25 per day).

    Labor has baulked at the cost of the EIAC’s Jobseeker proposal. There is speculation that the upcoming budget will include a $50 per fortnight increase in the Jobseeker payment for those over 55 years of age. It is unclear if that increase will apply to everyone over 55 years of age, or just to the 55 to 59 year old cohort who are currently ineligible for the additional $52 per fortnight already available to those over 60 and who have been unemployed for longer than nine months.

    A $3.57 per day rise in the Jobseeker payment for those over 55 years of age (or between 55 and 59) seems rather stingy. One might expect that the plight of the unemployed—among the least well-off and most financially-constrained members of society—would be a high priority in the middle of a cost-of-living crisis.

    Before last year’s election, the Labor party abandoned a previous pledge to raise Jobseeker payments, on concerns about growing Commonwealth government debt. The EIAC then only came about as a concession to gain Senator David Pocock’s support for the Secure Jobs Better Pay Act 2022.

    Labor’s meme of “inheriting a trillion dollar debt that will take generations to pay off” has echoed the Coalition’s 2013 so-called “budget emergency”, also used to blame the preceding government. The nation’s allegedly dire fiscal position was cited by Bill Shorten as justification for not adopting the EIAC’s key recommendations: ‘We can only do what is responsible and sustainable and unfortunately the budget we inherited from the previous government is heaving with a trillion dollars of Liberal debt, so [we] can’t do everything.’

    The strategy of deflecting accountability for policy choices on grounds of fiscal constraint has become less credible, given the robust post-pandemic economic recovery and the boom in commodity prices – all of which has generated large improvements in the Commonwealth government’s fiscal position. As illustrated in Figure 1, the government’s underlying cash deficit for the current financial year (2022-23), once expected to be $100 billion, has shrunk dramatically.

    Sources: Australian Government, Budget Papers, Monthly Financial Statements. Author’s calculations.

    Indeed, the Commonwealth Government’s latest Monthly Financial Statements show that it is on track to post a very small deficit, or even a surplus, for the 2022-23 financial year. As of March 2023 the underlying cash balance (UCB) had improved by $23.3 billion over the estimates in the October 2022-23 Budget. If the year-to-date deficit changes little in the last quarter, and with higher GDP than previously estimated, then the UCB in 2022-23 would come in at a diminutive -0.5% of GDP. That’s insignificant by any meaningful economic standard.

    Further upside is possible. If the average monthly improvement from November 2022 to March 2023 continues in the last quarter of the financial year, the UCB in 2022-23 would be a surplus of $2.8 billion.

    Australia’s public debt load – also measured appropriately as a proportion of GDP (rather than in big scary ‘trillion dollar’ terms) is also modest when compared to the nation’s peers and to its own historical record. Our general government debt (including state governments) is lower than any G7 economy, and half the size of the average for advanced economies. The same cannot be said, however, for Australian households: their debt is higher than any G7 economy, and ranks second (behind only Switzerland) among all industrial countries (see Figure 2).

    Figure 2: Government and Household Debt

    Sources: International Monetary Fund, World Economic Database. Bank for International Settlements, Credit to the Non-Financial Sector.

    Having switched from “opposition mode” into “governance mode,” it makes sense for Labor to start to talk up the nation’s public finances. Such a narrative would be plausible given that Australia’s fiscal position is robust and sustainable: now and into the foreseeable future. That is the current assessment of the International Monetary Fund in its latest Article IV Consultation, amongst others.

    The prospect for further substantial improvement in the UCB over the forecasts – and perhaps even a surplus – should raise expectations about what the government can do to ease cost-of-living pressures. Arguably, however, a liveable unemployment benefit should be prioritised regardless of the economic and fiscal outlook.

    The EIAC’s Jobseeker proposal is estimated to cost $24 billion over four years. Implementing all of the EIAC’s other recommendations brings the cost to $36 billion. The annual cost of the full package would amount, respectively, to just 0.3% of GDP in the next financial year. Such expenditures, while having a diminutive impact on the Commonwealth Government’s fiscal position, would literally transform the lives of the unemployed.

    When all is said and done whether a nation should have a liveable unemployment benefit is a question of principles. There is an obvious option for Labor to allay its worries about the budgetary or inflationary pressures of a liveable Jobseeker payment: namely, jettison the 2024-25 Stage 3 tax cuts, that are estimated to cost $300 billion over the first nine years. Tax cuts that mainly benefit high-income earners make no sense in an economic landscape where over 90% of the pre-tax income gains from growth in national income have in recent experience gone to the highest-income 10% of households.

    The reluctance of the government to discard or redesign the Stage 3 tax cuts is attributed by some to the Labor Party’s pre-election commitments. It remains that the tick boxes for good governance do not include steadfast adherence to suboptimal policy positions. Overseeing regressive tax cuts, while being unwilling to meaningfully improve the lot of the least well-off, has those principles back-to-front.

    Dr Brett Fiebiger is a post-Keynesian economist. His research focuses on macroeconomic policy, growth theory and income distribution.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • The Reserve Bank’s decision to raise rates shows a total lack of coherency

    The Reserve Bank’s decision to raise rates shows a total lack of coherency

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 3, 2023

    Wages growth is rising slowly and inflation is falling faster than expected, and yet the RBA decided to hit the economy again with another rate rise.

    Yesterday the Reserve Bank shocked markets and most economists by raising the cash rate to 3.85%. But it didn’t just contradict outside observers, it contradicted the views of the RBA board just one month ago when it decided to keep rates steady.

    Policy director Greg Jericho, writes in his Guardian Australia column that in the month since the April RBA meeting data on inflation has suggested faster than anticipated slowing, the economy overall is now expected to slow more quickly, and there is no sign of long-term wages growth rising beyond what would be consistent with 3% inflation.

    And yet despite this, the board decided to raise rates.

    The decision smacks of a board reacting less to economic conditions and more to the recent Review of the RBA which recommended taking the decisions to change rates away from the current board.

    The Reserve Bank suggested a month ago it needed time to pause and review. Nothing in the intervening time has suggested they made a mistake in not continuing to raise rate, and yet the bank seems determined to slow the economy and raise unemployment to 4.5%.

    The bank is so beholden to neo-liberal views of the non-accelerating inflation rate of unemployment that it is determined to keep raising rates until unemployment rises to a level it believes is “full employment”.

    We know the current level of inflation is largely driven by corporate profits and some overhang of supply-side issues and savings from the pandemic/lockdown period. At no point is there any sign that wages are rising in a manner that is fueling inflation and yet the RBA continues to attack inflation like we are experiencing the mining boom of the 2000s which saw wages and jobs grow strongly, rather than the current boom which is seeing profits grow exponentially and real wages plunge .


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  • Latest inflation figures show the RBA was right not to raise rates in April

    Latest inflation figures show the RBA was right not to raise rates in April

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 27, 2023

    Inflation is falling steadily but hitting low-income households the most.

    The March quarter consumer price index figures showed a 7.0% annual rise, however as Policy Director, Greg Jericho, notes in his Guardian Australia column, the monthly inflation figures that were also released on Wednesday showed annual growth had fallen to 6.3%.

    This fall was down from a peak of 8.4% in December and is the slowest growth since May last year.

    The figures reinforce the belief that the RBA board was right to ignore the views of many economists both within and outside the Reserve Bank. Not only is inflation falling but the biggest drivers of inflation in the March quarter were in areas with prices mostly determined by governments or in highly regulated sectors such as the gas and electricity markets. There was little sense of prices rising due to excess demand, rather the combination of price setting in the public sector and by commercial companies making use of high world prices for resources and ongoing supply issues in the housing market served to drive nearly two-thirds of the total increase in overall inflation the March quarter.

    Increasing interest rates would have done nothing to lower prices in these areas – indeed in the rental market any further rates rises would likely be just used as reason for increasing rents more.

    The Reserve Bank was right to stop raising rates. Should the slowing of inflation shows signs of ending before reaching the RBA’s target of 3% it can always cut rates then. For now, inflation is falling as hoped and attention must be drawn to those suffering the most from the rising prices – notably low-income households and those paying off a HELP debt that is set to be indexed by 7.1% – well above the current levels of wage growth.


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  • 7% Minimum Wage Rise Would Tackle Inflation, not Feed it: Research

    7% Minimum Wage Rise Would Tackle Inflation, not Feed it: Research

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    A 7% National Minimum Wage rise for low paid workers would help tackle the rising cost of living for those on award wages while having a virtually undetectable impact on economy-wide prices, new research from leading economists at the Centre for Future Work has found.

    The data comes as the Fair Work Commission deliberates about how much to boost the nominal wages for some of Australia’s lowest paid workers including cleaners, early childhood educators, hospitality workers and carers who are struggling in the cost of living crisis.

    Key Points:

    • The national minimum wage (NMW) has increased less than inflation for the past two years.
    • By June the NMW will be at least 4.2% in real value below where it was in 2020.
    • Despite this business groups continue to advocate for another below inflation increase.
    • Research from the Centre For Future Work reveals that the impact of a NWM rise on inflation is negligible and much less than that driven by profits.
    • Over the past 25 years there has been no correlation between increases in the NMW and inflation growth over the following year.
    • The ACTU’s call for a 7% rise would at most cause economy-wide prices to increase by an average of 0.4% – even if wage increases were fully passed on to consumers by companies.
    • That increase in prices would fit easily within the RBA’s inflation target range (2.5% plus or minus 0.5%).
    • With company profits at historic records, companies could readily absorb the costs of a higher minimum wage, rather than passing them on to consumers. They could fully absorb those costs through a reduction of just 1.4% in total company profits.
    • Suggestions that business can’t afford a 7% increase are false.
    • Suggestions that it would set off inflation are wrong.

    “This research shows that for low paid workers struggling with the cost of living a 7% wage is a solution to, rather than the driver of, inflation,” said Dr. Greg Jericho, Policy Director at the Australia Institute’s Centre for Future Work.

    “Over the past 25 years there has been no correlation between increases in the National Minimum Wage and inflation growth in the following year.

    “We need to move from thinking that workers are the ones who must always carry the burden. After 3 years of soaring profits during the pandemic, many sectors of the economy can afford to slightly reduce their margins and still make strong profits.

    “Low-paid workers have suffered a massive loss of real wages at the same time company profits have been rising. The 7% rise would be a small recompense for the workers who have seen their living standards deteriorate over the past two year.

    “Previous Australia Institute research has demonstrated how excess corporate profits, not wages, are driving post-pandemic inflation in Australia.

    “The fact is that average real wages in Australia fell 4.5% last year, the largest drop in a single year on record. That needs to be fixed, starting with the lowest paid who are carrying Australia.”

    The past two years have seen the minimum wage rise by less than inflation, causing a significant decline in the real purchasing power of millions of workers covered by the Modern Award system. This marks the first time in a quarter-century that the minimum wage has had a deflationary impact on the economy (that is, increased by less than the inflation rate) over successive years.