Today’s data on Australian wages growth will be important information for inflation and how many rate cuts we should expect from the Reserve Bank. This news comes when Donald Trump’s latest antics on doubling the tariffs on steel has seen Friday’s money markets raise their expectations on rate cuts from two to three! Thank you, Donald!

Of course, higher inflation (from wages and tariff action that could slow down the global economy) is bad for growth and doesn’t create a great picture for stocks. What US courts decide about the President’s wildcat tariffs will be crucial for share prices over the next few months.

One of the strongest reasons for the ALP’s election ‘stunning’ victory on May 2 was its support for higher wages, which will be added to today with the annual minimum wage decision. And another reason for a big bloc of voters supporting the Albanese Government was its support for something that employers would like relief from, namely, the work-from-home movement.

There are over 14 million employees in the workforce. Given most of them can vote, that’s a powerful group who have to see Labor being in their court more than the Coalition. Peter Dutton’s only real hope was to blame the Government for high inflation and 13 interest rate rises (even if that wasn’t totally true) but he failed to prosecute that case and made the big mistake of railing against the WFH trend. In fact, he was against it for public servants, but it was taken as a general anti-stance, which couldn’t have helped his cause to become PM (let alone an MP, which he failed to do on both counts).

On this subject, the AFR’s David Marin-Guzman tells us that at a meeting with the Government, “employers will push the case for flexibility on hours and penalty rates for people who work from home as part of high-level talks with the Albanese government’s new industrial relations minister to lift productivity.”

Remember productivity not only delivers more product and services per worker and units of technology, but it also cuts costs and helps lower inflation.

In a perfect world, it’s the magic pudding, where both bosses and employees should gain via higher wages and lower inflation.

Today’s meeting with Workplace Relations Minister Amanda Rishworth will pit employer groups against the ACTU, with the Minister wanting to boost our pretty hopeless productivity — her position, not just mine. “Election commitments on reproductive leave, a ban on non-compete measures and laws to protect penalty rates will be on the agenda as well as training requirements for workplaces that bring in artificial intelligence,” Marin-Guzman explained.

Bosses want clarity and a ‘fair go’ on penalty rates and how those rates apply for someone working from home. Employers have three test cases before the Fair Work Commission seeking exemptions for workers in finance, administration and retail if they work from home, requiring them to record their hours if they think they qualify for penalty rates.

Basically, employers are wary that employees could ‘gild the lily’ on what constitutes working longer than a normal day. This will be a test of the Government’s resolve to support bosses who actually employ people, at a time when Artificial Intelligence is looming as a solution for employers who feel that workers are having a lend of them.

This is a big meeting. So is this Fair Work Commission decision today, with the ACTU pushing for a 4.5% pay rise for those on the minimum wage. This would boost that wage to $25.18 per hour, lifting the salary for an annual full-time worker by $2,143 to $49,770.

While what’s decided will operate as of July 1 and directly affect 2.6 million workers, it is more as the pay of some workers is linked to the minimum wage plus a loading. So, this will be inflationary if the 4.5% hike gets up.

While we know the Government has backed a rise bigger than 2.4%, which is around the inflation rate, it hasn’t told us what it wants. On the other side, the Australian Restaurant and Cafe Association supports a minimum wage rise of 2%, which the ACTU says would mean a real wage cut for workers on the minimum wage.

While this wage decision won’t have a big baring on wage rises, it will impact inflation, how many rate cuts we get and what happens to the stock market and our super.

In reality, I expect the new Albanese Government will continue to lean heavily to the wants of workers, which will boost employer interest in AI and labour substitution. That will lead to higher unemployment in the future. However, economists can’t see the jobless rate going sky high in the near future, which is good news for Labor and not so positive for a Coalition that will only win voter support when those voters start losing jobs!

(Check out my TV show where I look at stocks with potential upside and former St George chief economist, Besa Deda, now at accountants William Buck, who predicts how many rate cuts are ahead).