A recruitment business survey says workers want pay rises bigger than inflation at a time when inflation is heading for, wait for it, over 8%. And this puts into focus the Government’s ‘across industry’ pay hikes that it’s planning with its new IR bill.

Over the weekend, the Government got former Wallaby footie-player-turned-Senator, David Pocock, to support the bill, giving into his demands to make the new pay rise system not include small businesses with up to 20 employees. Also for businesses up to 50 employees, the unions will have to prove that businesses are similar and therefore able to pay ‘across the board’ wage hikes.

It was progress for many SMEs but all businesses are facing pressure from workers for historically big pay increases.

The AFR reports that recruitment agency Robert Walters does an annual pay survey of 1,500 job candidates and employers, and this is what it found:

• 56% of bosses said ‘No’ to pay hikes bigger than inflation over next 12 months.

• 97% of job candidates want a rise equal to or bigger than inflation.

• 4 in 5 white collar workers will seek jobs elsewhere if they have to cop a real pay cut, which happens if there is no wage rise or the wage rise is less than 7.3%.

• Inflation is 7.3% now and tipped to go higher and wage growth is 3.1%, so real wages are falling.

• This comes as employees expect non-income benefits such as work-from-home, other flexible work arrangements, training and so on.

Putting more pressure on employers are the unions complaining about workers facing a cost of living crunch, but not all employers are flying high since the panic of the pandemic, which brought lockdowns, the work-from-home trend, bigger outlays for security threats, the need to pay back-rents and then there are rising inflation/cost problems. Oh yes, interest rates are also surging!

Today we see the October monthly Consumer Price Index and economists think it will rise from 7.3% to 7.8%, and it will run before the December quarterly number, which is tipped to top 8%!

Last quarter, inflation rose on building costs, but this quarter energy prices are expected to jack inflation higher. Westpac thinks inflation tops out at 8.3% in this quarter and starts to fall in the March quarter.

Why? It’s expected that supply chain costs will fall and the rate rises will be biting household budgets. And this will intensify when lots of Aussies shift off fixed rate mortgages to variable rate home loans.

The cash rate is now 2.85% and economists think it could peak at 3.85%, but UBS thinks 3.35% — let’s hope they’re right!

Remember this: if inflation remains high, the RBA will keep on raising rates and this could tip us into recession. That’s why today’s number will be a big headline tomorrow.