Australians on welfare are receiving compensation for rising inflation, although the majority of employees are likely to see salary losses until 2024.
In order to keep up with inflation, Centrelink payouts like JobSeeker are adjusted twice a year on March 20 and September 20.
continue until the latter half of 2023 or early 2024.
Since salaries increased by just 3.75 percent this fiscal year, Treasurer Jim Chalmers has disclosed that his department now anticipates inflation to soar to a 32-year high of 7.75 percent by the end of this year.
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JobSeeker increase to match inflation
Australians on the dole will receive $38 extra a fortnight to help them deal with surging inflation with most workers now tipped to suffer real wage cuts for two years.
JobSeeker for a single individual without children increased by 2.1 percent, or $13.20, on March 20 to $642.70 per fortnight, to make up for inflationary spikes in the third and fourth quarters for the jobless.
To account for inflation increasing over the last two quarters, JobSeeker is increasing by another 3.9 percent, or $25.10, on September 20 to $667.77.
The fortnightly payments for the jobless would have increased by $38.30 over the course of six months.
ANZ anticipates a 2.9% unemployment rate.
The unemployment rate is now at a 48-year low of 3.5%, but according to the ANZ bank, it will drop to only 2.9% in the March quarter of 2019 for the first time since 1974.
Senior economists Felicity Emmett and Catherine Birch are expecting unemployment, now at 3.5 per cent, to fall to the low threes by the end of 2022.
ANZ is also expecting the participation rate to rise from 66.8 per cent to a record high of 67.1 per cent by March next year.
‘The upward trend in participation seems largely driven by pull factors, such as it being easier to find a job in a strong labour market and more flexible/remote arrangements reducing barriers to employment,’ the bank said.
Treasury, which predicts an increase in unemployment as the Reserve Bank of Australia raises interest rates to rein in inflation, disagrees with this.
The unemployment rate was projected to increase to 3.75 percent by June 2023 and to 4 percent by June 2024.
Pay reductions due to high inflation
According to Dr. Chalmers, rising inflation reduces employees’ purchasing power.
‘More Australians are in jobs than ever before – and that’s a very welcome outcome – but fewer Australians are feeling confident about the choppy waters our economy is in,’ he told Parliament.
‘Because they see the impact that high inflation is having on their living standards – in an environment where workers aren’t getting wage rises sufficient to match price rises.’
According to fresh Australian Bureau of Statistics data, the consumer price index increased at its quickest rate since 2001 in the June quarter, at 6.1% annually.
This was the highest rise since 1990 after the historic one-off effect of the GST’s introduction was included.
According to Treasury, headline inflation will reach a 32-year high of 7.75 percent by the end of 2022 and won’t return to the Reserve Bank’s goal range of 2 to 3 percent for another two years.
3.75 percent salary increase is what the Treasury projects for 2022–2023.
However, it didn’t anticipate real wages to begin increasing once again until 2023–2024, when inflation would have returned to 2.75 percent.
This implies that until 2024, low-paid workers, whose pay increased on July 1, will actually experience real wage reductions.
The Fair Work Commission only gave those with awards a 4.6% pay rise if their weekly income exceeded $869.60, or an additional $40.
Since their salary is below inflation, even a 5.2% raise in the minimum wage, which is the highest since 2006, won’t be nearly enough for Australia’s lowest-paid employees.
Although it became effective on July 1st, employees in the aviation, tourism, and hospitality industries must wait until October 1st.
This translated to an increase of $40 to $812.60 a week.
To $21.38, the hourly wage increased by $1.05.
Since mid-2013, Australia’s wage price index has been stuck below the long-term average of 3%, but in the year to March, it was only 2.4%.
Once it is adjusted for inflation on September 20 the new minimum wage of $42,255 a year for individuals working full-time is still far more than the $17,362 level of the dole.