The Australian economy will bounce back with robust growth in 2021, but real wages will continue to fall for the next two years.
Even before the COVID pandemic, wage growth had been stagnant and barely keeping up with inflation.
But now, 22 of the country’s leading economists surveyed by The Sydney Morning Herald/The Age predict that wages will deteriorate further even though the economy is set to boom.
These economists expect the economy to grow by 6.5 per cent in 2021 and by 2.9 per cent in 2022.
Inflation is expected to average 2.7 per cent to the June quarter this year, and then 1.7 per cent over the following 12 months.
But the collective view of the 22 economists is that wage growth – already at a record low of 1.4 per cent – will drop to 1.2 per cent this year and lift to 1.6 per cent in 2022.
The alarming outlook for wages will be compounded by the Morrison government’s industrial relations bill, according to an analysis by a group of independent labour law academics that was submitted to a Senate inquiry.
One of the academics, Prof Andrew Stewart from Adelaide’s law school, said the overall impact of the Coalition’s IR bill was “to put downward pressure on wages and conditions”.
“That’s sending a message to employers that the way in which businesses should be getting through the pandemic and the recession is to cut wages and conditions,” he told The Guardian.
“And every shred of hard economic evidence we’ve got is that the route to recovery should be coming from the opposite direction, from wage rises.”
‘Every shred of hard economic evidence we’ve got is that the route to recovery should be coming from the opposite direction, from wage rises.’ — Professor Andrew Stewart, Adelaide Law School