This week Industrial Relations action commenced against my employer regarding our latest Enterprise Bargaining Agreement (EBA). This was mostly due to the fact that my employer’s wage offer under this agreement was a 0% pay rise for the next 3 years.
This is the first time in my employer’s history of offering no wage increase during the organisation’s EBA negotiations. In fact, our last EBA, which has now ended, contained a 2.5% wage increase each year.
Such an increase might not seem like a big deal, but let me explain why annual wage increases are important…
Consumer Price Index
The Consumer Price Index (CPI), also known as inflation, is essentially a measure over time of the variances in the cost of goods and services. This measurement is based on a constant basket of goods and services and assesses what a consumer would pay for the same goods and services each year.
In Australia, CPI is measured on the cost of the following 11 goods and services types each quarter:
- Food and non-alcoholic beverages
- Alcohol and tobacco
- Clothing and footwear
- Furnishings, household equipment and services
- Recreation and culture
- Insurance and financial services.
CPI movement over the last 12 months in Australia has been roughly around 2.1%. This means that if your bread and milk cost you $3 each this time last year, then they’re costing you $3.06 now.
This comparison compares across the board for all of the 11 items assessed by CPI calculations outlined above.
What does this mean for wages?
CPI is tolerable by consumers if wage growth exceeds CPI percentage. However, if wage growth is in line with CPI, then your not receiving increased disposable income at all, as it will just be eaten up by increased costs in goods and services.
Furthermore, if you’re receiving less than 2.1% wages growth, or no wages growth at all… Then that’s where CPI really bites you in the butt.
If you’re like me and being offerred less than 2.1% (or 0% to be precise), then you’re essentially taking a pay cut for doing the exact same work… Which, is bullshit in a developed society not in recession (in my humble opinion)!
What can you do about your wages?
One of the simplest things you can do to increase your income, is to ask for a payrise!
Comparison website Mozo recently undertook research into wage growth, or rather a lack thereof, in Australia and has determined that on average we should be asking for a $1000 a year payrise to keep up with the cost of living.
Mozo calculated the full time income for employees across all age groups and determined that “on average, CPI could result in an extra $90 in your pay packet every month”.
These figures are based on the calculated national average annual income of $63,000. However, if you earn above this, you should be asking for more to ensure you’re at least receiving a 2.1% payrise to keep up with inflation.
Why should you ask for a pay rise?
Quite simply, as Kirsty Lamont, Mozo Director points out “If your wage fails to grow year on year, you’re the one who is swallowing the rising costs of food, transport, housing and other every day costs”.
So, if you’re not happy to absorb the cost of living and essentially take a pay cut, you need to make sure that your income is at least keeping up with CPI!
I know the “I deserve a payrise” discussion with your employer can be awkward, even heated, but sometimes you have to have awkward conversations to get what you want
As for me… Until my employer comes to the table with a wages offer that at least keeps up with CPI, I’ll be passionately engaging in Industrial action to try and secure a reasonable wage offer, that doesn’t result in us taking a pay cut for the same work.
If you don’t know what your current wage offer is, get to know it now!
As an Australian, you should ensure your Award, EBA or other agreement allows for annual wage increases of at least 2.1%.
If you’re from the US, UK, Canada, or anywhere else, find out what inflation rate currently applies and check your wage offer for your annual wage increase.
If you’re wages aren’t keeping up with inflation, ask your employer for an equivalent annual wage rise. It may not go your way, but if you don’t ask or fight for it, chances are you will not receive it!