What goes up must go ...up?
Just when things should start balancing out in our economy, the scales look set to tip a little further. Because once again, not all that glitters is gold. In fact, what’s meant to help us out may actually just make things worse.
We’re talking about the government lifting the minimum wage.
Of course, it sounds great in theory. What could possibly be wrong with giving people more money to spend? Especially those already struggling to make ends meet.
Well, the theory continues. Because apparently there’s a chance that increasing minimum wage will worsen inflation and raise interest rates – even further!
The Australian Chamber of Commerce is proposing an increase of up to 3%. And they think they’re doing a good thing. Many businesses have done it tough throughout COVID with many more having lost their jobs. The least they can do now is give the workers some hope. The Australian Council of Trade Unions is even calling for a 5.5% boost.
The government is saying that it should match the current 5.1% inflation rate. But they’re reluctant to nominate an exact figure.
So, why is there a problem exactly?
It’s because many battling Aussies will still be left short. Experts are suggesting that a more sensible approach would be to commit to an above-inflation increase in the following two years. It is deemed that, without a real wage rise, more workers would consider strike action.
The downside of pushing wages up too high too soon is that it raises business costs which are then passed onto the consumer in the form of higher prices. And so the loop continues.
It’s a bit of a conundrum.
Low income earners across the country just wish they could catch a break. In fact, many middle income earners are hoping for the same thing.
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