We Can Officially Thank Billion Dollar Corporations For Horrific Inflation, Not Wages Growth
Turns out paying baristas an extra dollar an hour wasn't breaking the economy after all!
A new study has revealed that corporate profits, rather than wage growth, are the real culprit responsible for the insane levels of inflation we’re witnessing across the country right now.
Last month the head of the Reserve Bank of Australia Phillip Lowe asserted that wages growth had to remain low for Australia to avoid entering a recession, recommending that worker pay increases don’t exceed the current rate of inflation.
However, new research from the Australia Institute has shown that wages made no contribution whatsoever to inflation between 2020 and 2021, and are only responsible for 0.6 of the 4.1 percent increase in prices this financial year.
“Australia isn’t experiencing a wage-price spiral, it’s at the beginning of a price-profit spiral,” said Australia Institute Chief Economist Richard Denniss. “The national accounts show it is rising profits, not rising costs, that are driving Australia’s inflation. While workers are being asked to make sacrifices to control inflation, the data makes clear that the corporate sector needs to tighten its belt.”
CEOs in Australia were paid a record-breaking average of $2.31 million last year, according to data from the Australian Council of Superannuation Investors. Recently, Afterpay CEO’s Anthony Eisen and Nick Molnar topped the ranking of Australia’s highest-paid executives, earning a combined $264.2 million — 2,800 times the salary of the average full-time worker.
“It’s a shortage of competition, not a shortage of skilled labour, that is driving up the cost of living in Australia,” said Denniss.
“While companies are arguing that they have ‘no choice’ but to increase their prices, the fact that they are making record and rising profits is proof of how many choices they really have.”
Many areas of the economy have been left behind by inflation which the Reserve Bank predicts will peak at 7 percent by the end of the year. Nurses and teachers unions are fighting among some of the public sector employees that are fighting for wages growth to exceed the current rate of inflation, even while federal politicians quietly received the biggest salary increase in a decade, bringing the average salary for members of parliament to $217,060.
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