Workers will see their wages rise in real terms for at least the next five years in the face of entrenched inflation fears, the federal government has predicted.
Continued strength in Australia’s labor market is expected to lead to a four per cent increase in wage growth in the 2023/24 financial year, outpacing inflation by half a percentage point.
After nearly three years in which workers have seen their wages go backwards, Tuesday’s federal budget projected that real wage growth will continue until at least 2028.
Although wage growth is forecast to fall from 2024/25, it will remain above inflation, which is expected to return to the Reserve Bank’s target range of two to three per cent by the end of June 2025.
The Treasury is confident that a persistently strong labor market will not lead to a spiral in wages and prices, although the central bank noted continued wage-sensitive services inflation as a key source of uncertainty in its latest monetary policy statement.
The unemployment rate is forecast to reach four percent by the end of June, a quarter of a percentage point lower than forecast in the previous year’s budget.
It is expected to peak at a historically low 4.5 percent before starting to fall back in four years, well below the pre-Covid rate of 5.2 percent.
The Government will seek to further boost participation in the workplace by trialling programs to help employers provide work opportunities to long-term unemployed jobseekers and support businesses to provide paid work for people with high barriers to employment.
“We want an employment system that works to connect people to jobs and that employers want to use to meet their workforce needs,” Employment Secretary Tony Burke said on Tuesday.
A significant contributor to wage growth was a 15 percent increase in pay for aged care workers supported by the federal government.
An extra $65.6 million over the next four years will be spent on attracting and retaining workers as the Government tries to deliver on its promise of around-the-clock staffing for aged care residents.
Wage increases are also planned for childcare workers.
Another $98.4 billion in funding to increase support for children with additional needs is expected to further increase women’s labor force participation.
Despite recent strides, fewer than 63 percent of women participate in the labor force, compared to more than seven in 10 men.
