Younger, poorer Australians are struggling to fund their basic needs as the cost-of-living crunch outweighs pay rises.
Sales consultant Alex*, 31, told NewsWire the while he made a decent wage thanks to a generous commission, he still needed to move in with his in-laws simply to pay the bills.
“Me and my partner are now living at my mother-in-law’s house as we were paying $800 a week for a one bedder and we literally could not afford it,” he said.
Alex said he had a similar story to many – his money simply didn’t stretch far enough to pay the bills.
“Rent was the worst thing ever, food was also a little bit over the top, but now we strictly go to a cheaper supermarket to save money,” he said.
Such is the cost of living pressures Alex and his partner are trying to save money and eventually move to a regional town.
“Sydney’s hard, it’s such an expensive city,” he said.
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Alex’s story is similar to many, with even generous pay rise not enough to keep up with cost-of-living expenses.
Employment Hero data prepared for NewsWire shows the average Australian on the platform received a 4.8 per cent pay rise in the 12 months until October.
Even with this generous pay rise, Australian Bureau of Statistics data shows rent and groceries are up nearly 7.9 per cent over the same period, meaning Australians are going backwards 3 per cent when it comes to basic living expense.
Employment Hero founder and chief executive Ben Thompson explained to NewsWire that poorer Australians were still feeling cost-of-living pressures.
“People who are living pay cheque to pay cheque and haven’t got a lot of savings are feeling it most,” he said.
“As soon as your grocery bills outstrip your salary, what can you do?”
Camera IconCost of living means Australians need a huge salary bump just to keep up. NewsWire / Nicholas Eagar Credit: NewsWire
At the same time, Mr Thompson said it was unrealistic for businesses to simply pay an employee the gap in costs, and even if they could afford to do so, it would not be in the employees’ long-term interests.
“That is what creates a wage price spiral where the cost of living exceeds the wage growth,” he said.
“In the Australian modern award system, there’ll be a wage case review and that will impose wage hikes for businesses, which means they need to increase their prices to accommodate the cost increases which leads to inflation getting away.”
According to Employment Hero data, Australians working in labour jobs in the construction industry, crew members, shop assistants, general retailers and data entry roles are feeling the cost-of-living crunch more than most.
“The services sector in particular is where the larger share of where low paid workers sit and they are doing it the worst “ he said.
Mr Thompson said the solution was a productivity improvement, allowing businesses to make more with the same cost base.
“We are just not seeing that come through in the economy,” he said.
“We are seeing a huge amount of investments in artificial intelligence but as yet we are not seeing it reduce the wage-price spiral.
Camera IconLabourers are doing it tough. Christian Gilles / NewsWire Credit: News Corp Australia
Young people abandon Sydney
Alex says Sydney is simply unaffordable for the average person, as he was working multiple jobs while trying to put himself through school.
“I was always struggling, having to work more than 40 hours a week, having to find additional income through Uber Eats, I simply couldn’t stop working,” he said.
“I think I speak for many people around me, I’m not the only one moving to try and save money.”
“I have friends who live south already and they are having the best life even though they aren’t making a Sydney wage.”
Alex plans to save the money he was previously spending on rent and use it as a down payment to buy a property in a regional town between Sydney and Melbourne.
Camera IconChris Minns has flagged the importance of housing reform. NewsWire / Pool / Bianca De Marchi Credit: News Corp Australia
NSW Premier Chris Minns has blamed the lack of affordable housing in Sydney on a NIMBY culture, which has stalled new housing plans and forced young people to “up and leave” the city
Under proposed changes, the government will streamline planning and remove red tape in an effort to build more houses.
“It’s (the reforms) long overdue. We’ve got some of the slowest approval times and we’re producing the lowest number of houses per capita,” Mr Minns said.
“And yet we’ve got the most expensive houses and the most expensive rents in the country.
“We’re seeing the next generation of Australians up and leave. We want them to stay right here. But in order for that to happen, we’ve got to build houses.”
*Alex is a pseudonym
