Corporate profits have continued to soar, driving inflation while effectively reducing workers’ wages.
The findings from the Australia Institute’s Centre for Future Work found salaries have not kept up with inflation as companies mark up prices and record sky-high revenues.
The evidence “couldn’t be any clearer”, the centre’s director Jim Stanford said.
Corporate profits will need to take a hit.
“Enormous corporate profits fuelled the inflationary crisis and remain too high for workers to claw back wage losses,” Dr Stanford said.
“Companies in many industries, not just mining, were able to increase prices far above their costs, fuelling the surging inflation that rippled through the economy and now threatens it with high interest rates and possible recession.”
Workers have faced the fastest and largest drop in real wages since the 1940s, having dropped by an average of six per cent since mid-2021.
Though Australian corporate profits also fell in recent months, thanks in part to the slowed pace of inflation, they remain well above historic norms and have driven the majority of inflation since the COVID-19 pandemic.
“Real wages in Australia saw the largest and fastest fall since the Second World War, yet the usual suspects in the business community want to blame labour costs for inflation,” Stanford said.
Researchers from the think tank have called on the government to introduce price regulations across the energy, housing and transport industries alongside reform to encourage competition and end exploitative pricing practices by large companies.
They have also suggested supporting wage increases above inflation to repair the damage done to workers’ pockets.
The report comes on the eve of a union-commissioned review into price gouging in the Australian economy that will hear from the public and interested parties such as Dr Stanford and Australia Institute chief economist Greg Jericho.
The inquiry was set up by the ACTU because of concerns excessive corporate profits were doing more to fuel soaring inflation than rising wages.
Former Australian Competition and Consumer Commission chair Allan Fels will lead the inquiry and investigate the scale of corporate price gouging practices and its impact on everyday Australians.
Professor Fels will give his opening remarks on Thursday in Melbourne.
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