The employer group’s minimum wage claim comes as economists warn next month’s decision will be critical in controlling inflation and could threaten the prospect of rate cuts.
A big employer group has backed a “responsible” 3.8 per cent increase in the minimum wage next month as economists warn the looming pay case will be critical to controlling inflation and could threaten the prospect of rate cuts later this year.
AiGroup chief executive Innes Willox said 3.8 per cent – the highest claim of all the employer groups and the highest ever for AiGroup – would “strike a responsible balance”. In Tuesday’s budget, Treasury softened its inflation forecast for 2023-24 from 3.5 per cent to 3.25 per cent.was still necessary to reverse the huge real wage cuts since 2021.“Tuesday night’s federal budget showed that wages will grow in real terms in early 2024 as inflation continues to fall,” she said.
“As the budget shows, modest wage growth has not caused Australia’s inflation problem, but along with strong jobs growth, it has helped to improve the budget bottom line dramatically.” “There are no signs of a wage price spiral developing and medium-term inflation expectations remain well anchored.”Commonwealth Bank senior economist Gareth Aird cautioned that any increase larger than last year’s minimum wage rise of 4.6 to 5.2 per cent would be a “key risk” in its forecast that the Reserve Bank would cut rates by the end of the year.
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