Federal Treasurer Josh Frydenberg has released his mid-year economic and fiscal outlook (MYEFO), revealing that wage growth has been downgraded to 2.5 per cent.
The MYEFO is an updated version of the budget released in April this year.
According to the Reserve Bank of Australia’s (RBA) key economic indicators, wage growth is currently at 2.2 per cent, lower than the government’s newly revised figure.
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In the MYEFO report released today, the government said wage growth has moved “slower and more muted than past cycles”.
“This is partly explained by lower inflation expectations, while strong employment growth has also drawn people into the labour market who were not previously looking for work, suggesting there may be more spare capacity than previously thought,” the report said.
Various sources suggest that “a strengthening in wage growth will be more gradual than previously expected,” the report added.
However, shadow treasurer Jim Chalmers has taken aim at the government, claiming that Australians would have been $2,200 better off if the government had met its wage growth targets.
Over the weekend, Chalmers excoriated the Coalition for consistently downgrading their wage forecasts, stating that the MYEFO update was a “humiliating admission from the government” that the Morrison government had left the economy in a worse state than when they found it.
“The government's got their wages forecast wrong 33 times over various budget and budget updates. What that shows is that ordinary Australian workers are paying the price for the Morrison government's incompetence, ineptitude and inaction on the economy,” Chalmers told Sky News on Sunday.
“It will be a signed confession that after promising at the election that they'd make the economy even stronger the Morrison Government has actually made the economy even weaker. It's deteriorated on their watch.”
When compared to forecasts in the 2018-19 budget, the average full-time worker is now $387 worse off, he added.
“The budget also includes optimistic wages growth forecasts of up to 3.5 per cent despite wages growth never reaching or exceeding three per cent in the Liberals’ entire six-year period in office.”
But Finance Minister Mathias Cormann rejected Labor’s claims that wage growth had stalled under the government.
"Real wage growth, which is wages growth above inflation, is stronger than what it was when Labor lost government,” Cormann told media in Perth.
“Our economy continues to grow, our wages continue to grow faster than inflation.”
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