Prices have risen by 6.1 per cent in the past 12 months, according to the Australian Bureau of Statistics.
But according to March data, average wages in Australia have only increased by 3.4%.
The cost of groceries has risen more than wage growth. (Kate Geraghty)
Fair Work Australia raised the minimum wage in recent weeks to keep in line with inflation.
But University of Melbourne sociology professor Irma Mooi-Reci said most people not on the minimum wage were not getting pay rises in line with inflation.
“It’s fair to say that average wage increases in the private sector are lower than recent minimum wage increases,” he said.
He noted that the data did not include additional earnings from bonuses or promotions.
However, the unemployment rate is at a 48-year low of 3.5%.
With countless job openings in almost every industry, wages would be expected to rise to compete for workers.
But that hasn’t happened.
“One of the reasons for this could be attributed to companies’ expectation that migrant workers will soon return and fill the current skill shortage,” Mooi-Reci said.
“Another reason may be related to the fact that Australians are not switching jobs en masse or giving up to negotiate higher wages, so different from the trends we’ve seen in the US.
“These trends indicate that there are fewer forces to demand wage increases from workers.”
While the United States saw what was described as a “great resignation” after the pandemic, a similar trend has not occurred here.
Instead, most Australians are staying in their jobs and waiting for a raise.
ACTU secretary Sally McManus said the cost of living crisis was happening at the same time as record corporate profits and CEO bonuses.
“Profits have soared and working people are really feeling the cost of living pressures with rising inflation,” he said.
“Employers can afford wage increases and workers need and deserve them, but too many employers are trying to keep wage increases low to protect their profits.
“Our bargaining system is no longer delivering pay growth that keeps pace with the cost of living and is not fit for purpose – it’s time for a change.”
So is there any hope of a solution to the inflationary crisis soon?
“If ‘soon’ means starting this year, the answer is probably no,” Mooi-Reci said.
“However, if ‘soon’ means within the next two years, then the answer is ‘of course’, we will certainly see wage growth equal to inflation.”
Between now and then, Australian mortgage holders are almost certain to see more interest rate rises to cool the economy.
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