The Australian Council of Trade Unions (ACTU) is calling on the Reserve Bank of Australia (RBA) to reconsider its monetary policy stance, after the RBA Board decided to hold the cash rate steady at 4.35 percent.
The ACTU argues that raising unemployment is not the answer to tackling inflation, which has already begun to slow down despite a historically low unemployment rate of 4.1%. This figure sits well below pre-pandemic levels.
“The RBA should be looking to cut rates, not increase unemployment. Unions reject the logic that unemployment needs to rise for inflation to fall,” said ACTU Secretary Sally McManus.
The ACTU points to recent data from the Australian Bureau of Statistics showing annual inflation dropping to 4.1% in December 2023, a significant decline from the peak of 7.8% a year prior. They also highlight research from international organisations like the OECD, IMF, and various central banks suggesting current price pressures stem from corporate profits, not wage growth.
McManus emphasised the importance of full employment, where everyone seeking a job can find one.
“The last few years have shown that more people in jobs with sufficient hours don’t lead to unmanageable wage increases,” she stated.
“The RBA needs to abandon outdated models that rely on higher unemployment.”
Instead of focusing on increased unemployment, the ACTU is urging the RBA to shift its focus towards alleviating pressure on working people, particularly the issue of price gouging which has been identified as a major contributor to inflation.