New OECD figures show Australians struggling with the cost of living crisis are worse off than most other workers around the world.
The cost of living crisis is particularly severe in Australia, with wages lagging behind inflation for three years.
The OECD calculated that real wages in Australia were 4.8 percent lower in the third quarter of 2024 than at the end of 2019, shortly before the Covid-19 pandemic.
“This is one of the largest declines in real wages across the OECD countries,” the report said.
‘Real wages rose in 2024 for the first time in almost three years, but households remain under pressure from the cost of living crisis.’
This leaves Australian workers even worse off than their counterparts in the rich countries of Spain, Germany and the United States, where wages have also fallen in real terms, adjusted for inflation.
This is despite Prime Minister Anthony Albanese’s promise in 2022 to get wages moving with new negotiations between employers.
‘Real wages are now growing year on year in most OECD countries, against a backdrop of falling inflation,’ the OECD said.
Australians really are worse off than workers in most other rich countries, new OECD figures show
This left Australian workers worse off than their rich-world counterparts in Spain, Germany and the United States, where wages have also fallen in real terms, adjusted for inflation.
“But in many countries they are still below 2019 levels.”
Australian wages lagged inflation from the second quarter of 2021, when Sydney went into lockdown, until the third quarter of 2024.
This meant that Australian workers took a pay cut for three years.
Inflation is now running at 3.6 percent, compared with 4.1 percent for wages. However, real wage growth of 0.5 percent is still quite weak in light of higher rents and higher gasoline and electricity prices.
After years of stagnant or declining wage growth, the OECD argued that a wage-price spiral like that of the 1970s was unlikely.
“As real wages regain some of the lost ground, profits are starting to absorb some of the rise in labor costs,” the report said.
‘In many countries there is room for profits to absorb further wage increases, especially as there are no signs of a price-wage spiral.’
Australia’s lowest-paid workers are little better off than they were five years ago, despite some significant increases in the minimum wage.
Adjusted for inflation, the real minimum wage is only 2.3 percent higher than in 2019. This is well below the OECD median increase of 8.3 percent.
Australia’s 2.7 million workers on the national minimum wage or welfare received a 3.75 percent pay rise on July 1, only slightly above inflation of 3.6 percent.
OECD Secretary-General Mathias Cormann (left with former Finance Minister Joe Hockey) stepped down as Australia’s Liberal Party Finance Minister in October 2020 and began his six-year term in Paris in June 2021.
This has seen the minimum wage for a full-time job rise to $47,627, which is still only half the average full-time wage in Australia of $98,218.
Unemployment remains low at 4 percent, and the OECD predicts that this rate will only rise to 4.3 percent by the end of 2025.
This would still be below the OECD average of 4.9 percent.
“Labour market tightness is easing but remains high overall,” the OECD said.
OECD Secretary-General Mathias Cormann stepped down as Australia’s Liberal Party Finance Minister in October 2020 and began his six-year term in Paris in June 2021.