ME’s consulting economist, Jeff Oughton, outlined to Nest Egg some of the longer-term implications stemming from Australia’s current wage environment.
As mortgage debt rises and income rises do not correlate, Mr Oughton has said that more Australians will need to continue to work.
“It means two things, they either work longer or maybe enjoy some inheritance,” the economist indicated.
Predicting that someone who is 25 today is probably going to work until they are 70 to 75, Mr Oughton said people “will work another 10 years, [and] part of that will be to fund their lifestyle and pay back the bigger mortgage they have relative to income then what their parents had”.
As Australians worry about their financial future, those able to save contributed slightly more to their savings account, with 52 per cent of households having between $0 and $10,000 saved.
While Australians want to save, the data showed that “50 per cent of Australians don’t have a dollar left over at the end of the week”, according to Mr Oughton.
Wanting to work more
Financial comfort among households has lowered as a consequence of the weakening job market, it’s been reported, which in turn has resulted in subdued wage growth, falling comfort with income and high levels of both underemployment and job insecurity.
For Mr Oughton, a consequence of this is that “underemployment is a feature of the current labour market”.
“We not only have subdued income growth here, but at this point in time around 35 per cent of part-time and casual workers are looking for an average 23 more hours of work a week,” he said.
Rich still getting richer
The results from ME Bank’s study showed that income rises are still occurring, although are demonstrably subdued, and across the country it’s those on a lower income that are experiencing a greater fall in wages.
Mr Oughton said across the spectrum, “people on lower incomes are experiencing more income falls and people on higher incomes are experiencing more income gains”.
Calling it one of the drivers for comfort divergence, Mr Oughton broke down the figures further – noting that about 40 per cent of households with incomes less than $40,000 saw their incomes decrease, with only 25 per cent of households housing income earners between $75,000 and $100,000 noted the same.
For households with incomes over the $100,000 mark, only 14 per cent of respondents indicated that their income had decreased.
Indicating that the reverse is also true, Mr Oughton said “people with higher incomes are more likely to have increases [to their income] as well”.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.