Why you’ll have to wait a year for a real pay rise

Aussie workers won’t get a ‘real’ pay increase until early 2024.

Aussie workers walking Sydney city and Australian money notes. Pay rise concept.
Aussie workers won't see a 'real' pay rise until early 2024. (Source: Getty)

Aussie workers will have to wait another year before they see a growth in their ‘real wages’, with the budget predicting them to rise in early 2024.

‘Real wages’ is used to describe how much money we are making, compared to the rising cost of living.

For example, if you received a 5 per cent pay rise, but inflation went up 7 per cent, you would actually have taken a 2 per cent ‘real wage’ cut.

The good news? Real wage growth is expected to come sooner and stronger than the government previously expected.

“Wages growth for 2023–24 is now forecast to be 4 per cent – up a quarter of a percentage point from what was expected in October,” Treasurer Jim Chalmers said.

“This combination of lower-than-expected inflation and higher wages, means that an earlier, and stronger, return to real wages growth is forecast for 2023–24.”

Real wage growth is now expected to return in early 2024, marking the first real increase in three years. By June 2024, the budget expects real wages to grow by 0.75 per cent.

Inflation is expected to fall from 6 per cent this year to 3.25 per cent next year. Meanwhile, nominal wages are expected to grow 4 per cent by July 2024, its fastest pace since 2009. The pace is then projected to ease to 3.25 per cent in 2024-25.

What was in the budget for workers?

Aged-care workers were a major winner of the budget, with $11.3 billion set aside to fund a 15 per cent increase in award wages for more than 250,000 workers.

The pay increase will kick in from July 1 and will cover registered nurses, enrolled nurses, assistants in nursing, personal-care workers, head chefs and cooks, recreational-activities officers and home-care workers.

The government has also backed a real wage increase for Australia’s lowest-paid workers. The government recommended the Fair Work Commission (FWC) ensure “real wages of low-paid workers do not go backwards”.

The FWC’s decision on the new minimum and award wage rates will come into effect from July 1 and will impact more than 2.6 million workers.

In 2022, the commission ruled to lift the minimum wage by $40 per week, amounting to an increase of 5.2 per cent.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.