Dimension: Broad opportunities for employment and well-paid, secure jobs
Growth in the wage price index adjusted for inflation, as measured by the consumer price index
Why does this matter
Increases in real wages allow households to increase the volume or quality of consumption, improving their wellbeing outcomes.
Declining real wage performance negatively impacts the welfare of households as it means pay rises are not keeping up with the price of goods and services.
Has there been progress
After recording sustained growth since the 1990s, real wages stagnated in the years prior to the COVID-19 pandemic. While inflation was low prior to the pandemic, wage growth was subdued, resulting in sluggish real wage growth.
Nominal wages have picked up and are currently growing at the fastest rate in over a decade. However, over the most recent years real wages have been impacted by high inflation. As inflation moderates over the period ahead, real wages are expected to return to growth.
There are a range of measures of wage growth available including National Accounts based measures of earnings that include broader drivers of wages growth including increases from productivity improvements and changing jobs.
Real wages are only one source of income, others that also influence financial security include for example pension incomes.