Budget 2022: Unemployment to reach 48-year low in September
The Coalition’s pre-election Budget has forecast unemployment to reach 3.75% in the September quarter of 2022, the lowest since 1974, signalling rising wages as the ticket out of inflation.
The Treasury’s Budget was expecting inflation to moderate from 4.25% in 2021-22 to 3% in 2022-23, normalising to 2.75% in 2023-24.
Pointing to a strong labour market with unemployment at 4% and the participation rate at a record high of 66.4%, the Budget forecasted wage growth to accelerate to its fastest pace in almost a decade.
It forecasted the Wage Price Index to increase from 2.75% in 2021-22 to 3.25% in 2022-23, predicting average earnings per hour to increase by 5% through the year to the June quarter of 2022.
Acknowledging Australia had been affected by global inflationary pressures such as elevated oil prices and supply chain disruptions, the Budget stated that domestic inflationary pressures were more moderate than in other advanced economies.
In his Budget speech, Treasurer Josh Frydenberg said the deficit for 2022‑23 was expected to be $78 billion or 3.4% of GDP, halving as a proportion to GDP over the next three years.
“Net debt as a share of the economy will peak at 33.1% at 30 June, 2026, significantly lower than forecast last year.”
In his post-Budget interview with ABC’s Leigh Sales, Frydenberg was asked why he was confident on wage rises, noting they had been flat over the last 20 years.
In reply, Frydenberg said: “Employers will pay what they need to get the right workers.
“What we’ve encouraged in this Budget is more relief for small businesses with two particular measures to drive their adoption of digital technologies, to drive their skilling of their workforce.
“What we've got is more infrastructure programs to support growth, particularly in our regions, all of which is going to drive a stronger economy where businesses are not just more productive and competitive, but they're also more profitable.
“And that gives them the opportunity to take on workers, to pay them higher wages, especially when right now the biggest issue facing businesses is workforce shortages.”
AUTHOR
Liam Cormican
Recommended for you
The financial advice industry has enjoyed another week of strong new entrant numbers, totalling nearly 40 for the past fortnight, thanks to the latest exam passes.
Momentum Media’s wealth publishing network – comprising InvestorDaily, ifa, SMSF Adviser, Money Management, and Super Review – is proud to launch the annual Australian Wealth Management Awards.
Investment information firm Equity Story has signed a binding heads of agreement to acquire South Australian financial advisory and stockbroker Baker Young for $4.2 million.
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
