In the present day (August 19, 2026), the Australian Bureau of Statistics launched the most recent – Wage Worth Index, Australia – for the June-quarter 2026, which reveals that the mixture wage index rose by 3.2 per cent over the 12 months down from 3.4 per cent within the March-quarter. With the annual inflation charge for the June-quarter got here in at 3.7 per cent, employees as soon as once more needed to endure actual wage cuts, which isn’t in keeping with an financial system that’s overheating and working wanting assets. It additionally displays badly on the fixed claims from RBA officers together with the governor that unemployment remains to be not low sufficient and the ‘tight’ labour market is contributing to the marginally elevated inflation charge. Nothing could possibly be farther from the reality and this knowledge demonstrates that.
Newest Australian knowledge
The Wage Worth Index:
… measures modifications within the value of labour, unaffected by compositional shifts within the labour pressure, hours labored or worker traits
Thus, it’s a cleaner measure of wage actions than say common weekly earnings which could be influenced by compositional shifts.
The abstract outcomes (seasonally adjusted) for the June-quarter 2026 have been (the last-quarter result’s proven in brackets):
| Measure | Quarterly (per cent) | Annual (per cent) |
| Whole hourly wages | 0.8 (0.8) | 3.2 (3.3) |
| Personal hourly wages | 0.7 (0.8) | 3.1 (3.2) |
| Public hourly wages | 0.9 (0.5) | 3.4 (3.3) |
| All teams CPI measure | -0.1 (1.4) | 3.7 (4.1) |
| Trimmed imply inflation | 0.3 (0.1) | 3.6 (3.5) |
| Weighted median inflation | 0.3 (0.2) | 3.7 (3.5) |
On value inflation measures, please learn my weblog publish – Inflation benign in Australia with loads of scope for fiscal growth (April 22, 2015) – for extra dialogue on the assorted measures of inflation that the RBA makes use of – CPI, weighted median and the trimmed imply.
The latter two purpose to strip volatility out of the uncooked CPI collection and provides a greater measure of underlying inflation.
They’re displaying no indicators of an inflation outbreak.
The ABS press launch – Annual wage development of three.2% in June quarter 2026 – notes that:
The Wage Worth Index (WPI) rose 0.8 per cent within the June quarter 2026 and three.2 per cent yearly (seasonally adjusted) …
Annual wage development of three.2 per cent is barely down from 3.4 per cent on the similar time final yr …
Jobs with a wage change of lower than 4 per cent over the past 12 months rose to 79 per cent, from 75 per cent in June quarter 2025. That is the most important share recorded since June quarter 2022 (+84%).
… The decline within the share of jobs with bigger wage rises has contributed to slower wage development total …
Abstract evaluation:
1. Wages development declining – no outbreak evident nor was there ever any proof of that..
2. Nominal wages development has been going backwards and actual wages falling.
3. Actual wages have declined within the final 3 consecutive quarters and at the moment are 6.4 per cent decrease than they have been within the June-quarter 2020.
4. It tells you the way far out of contact the technocrats within the RBA have grow to be – and they’re nonetheless claiming of their latest financial coverage assertion that unemployment has to rise additional.
2. During the last 25 quarters, there have been solely ten which have delivered actual wages development.
Actual wage traits in Australia
The abstract knowledge within the desk above confirms that actual wages development total (personal and public sectors) has been in decline for the final 4 quarters and unfavorable for the final three after a restoration following the ten quarters of cuts within the Covid inflation interval.
The next graph makes use of the All teams CPI to point out the motion of actual wages within the personal sector from 2005 to the June-quarter 2026.
The fluctuation in mid-2020 is an outlier created by the momentary authorities resolution to supply free youngster look after the June-quarter which was rescinded within the June-quarter of that yr.
General, the report since 2015 has been appalling.
All through many of the interval since 2015, actual wages development has been unfavorable except some partial catch-up in 2018 and 2019 and extra just lately after the COVID-19 provide shock abated considerably.
Since that COVID-19 shock, regardless of some actual wages beneficial properties in some quarters, the general actual wage has slumped by 6.4 per cent.
The inflation that we’re witnessing, and witnessed throughout the COVID-19 disruptions, isn’t being pushed by the labour market, which signifies that it’s not a capability constrained occasion.
The nice productiveness rip-off continues
Whereas the decline in actual wages signifies that the speed of development in nominal wages is being outstripped by the inflation charge, one other relationship that’s necessary is the connection between actions in actual wages and productiveness.
As a part of their try at justifying the rate of interest hikes, the RBA have additionally been making an enormous deal of the truth that wages development is just too excessive relative to productiveness development.
Traditionally (up till the Eighties), rising productiveness development was shared out to employees within the type of enhancements in actual dwelling requirements.
In impact, productiveness development offers the ‘house’ for nominal wages to develop with out selling cost-push inflationary pressures.
There may be additionally an fairness assemble that’s necessary – if actual wages are maintaining tempo with productiveness development then the share of wages in nationwide revenue stays fixed.
Additional, larger charges of spending pushed by the true wages development can underpin new exercise and jobs, which absorbs the employees misplaced to the productiveness development elsewhere within the financial system.
The next graph which reveals the overall hourly charges of pay within the personal sector in actual phrases deflated with the CPI (blue or decrease line) and the true GDP per hour labored (from the nationwide accounts) (inexperienced or higher line) from the June-quarter 1999 to the June-quarter 2026.
It doesn’t make a lot distinction which deflator is used to regulate the nominal hourly WPI collection. Nor does it matter a lot if we used the nationwide accounts measure of wages.
However, over the time proven, the true hourly wage index has grown by solely 4.6 per cent, whereas the hourly productiveness index has grown by 25.8 per cent.
The dip in productiveness development is generally because of the parlous funding charges of Australian companies as funding funds have been shifted into the monetary markets chasing short-term profiteering.
If I began the index within the early Eighties, when the hole between the 2 actually began to open up, the hole could be a lot better. Knowledge discontinuities nonetheless stop a concise graph of this kind being supplied at this stage.
For extra evaluation of why the hole represents a shift in nationwide revenue shares and why it issues, please learn the weblog publish – Australia – stagnant wages development continues (August 17, 2016).
The place does the true revenue that the employees lose by being unable to realize actual wages development in step with productiveness development go?
Reply: Principally to earnings.
These weblog posts clarify all this in additional technical phrases:
1. Puzzle: Has actual wages development outstripped productiveness development or not? – Half 1 (November 20, 2019).
2. Puzzle: Has actual wages development outstripped productiveness development or not? – Half 2 (November 21, 2019).
Conclusion
Within the June-quarter 2026, Australia’s annual nominal wage development was 3.2 per cent, whereas the inflation charge over the identical interval was 3.7 per cent.
Actual wages as soon as once more fell – third consecutive quarter.
These traits make a mockery of the RBA claims that the labour market is just too tight and contributing to the inflation charge through extreme wages stress.
That’s sufficient for as we speak!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
