In the 1970s, economists coined the term “stagflation” to describe raging inflation as the economy simultaneously tanked and unemployment rose. There is a new buzz-word trending to describe exactly the same phenomenon: “warflation.” And it’s bad news for workers!
Even before the U.S. and Israel teamed up on 28 February to launch a devastating war, wages were not keeping up with inflation. Real wages went backwards in the years after the pandemic lockdowns, while prices soared. Figures make this concrete. The Australian Council of Trade Unions (ACTU) says that at the end of last year, workers were already four percent worse off than they were before COVID. Data released by the Australian Bureau of Statistics on 18 February this year confirmed that the Wage Price Index for the 12 months to December 2025 rose by 3.4 percent; inflation for the same period was 3.8 percent.
Winners and losers. Across West Asia, the imperialist bombing campaign has killed and injured thousands, while making millions more people into refugees. The war has also triggered an oil shock. Crude oil prices have almost doubled, resulting in fuel prices soaring. Described by the International Energy Agency as “the largest supply disruption in the history of the global market,” the energy crisis is washing through the economy and turbo-charging inflation. As costs continue to spiral upwards at the petrol pump and the supermarket, it is clear that the working class is shouldering the burden of this crisis. High housing costs, made worse by three interest rate hikes this year, have resulted in stretched working-class budgets reaching breaking point.
Prior to the war, 20 million barrels of oil per day flowed through the Strait of Hormuz. Most of the population is feeling the pain. This is especially so for workers, who use their own cars as part of their job. Unions, such as the Australian Nursing and Midwives Federation whose members deliver nursing care in the community, are demanding that travel allowances be adjusted in response to fluctuations in fuel prices. Yet some benefit from choking off this crucial artery. U.S. and Russian oil producers, for example, are enjoying a profit bonanza. As are Australian gas producers. Woodside Energy, which turned a handy profit of almost 4 billion Australian dollars last financial year, will be among those rejoicing as gas prices skyrocket.
Even without the inflationary impact of higher oil prices, funding wars is inflationary. Weapons become obsolete. When they are detonated, as we see clearly from the destruction in the current war, missiles destroy infrastructure which has to be rebuilt. Military expenditure adds to demand without producing commodities that meet the needs of consumers, generating further inflationary pressure. Rather than looking at the real drivers of inflation, managers of the capitalist economy, such as the International Monetary Fund, warn governments against stimulating the economy by offering cost of living relief to those in most need. Employer groups are arguing that real pay rises for the lowest paid workers reliant on awards would undermine any fight against inflation. These captains of industry and capitalist boffins are really saying that to pay workers enough for food and rent is a problem! Look instead at military spending, imperialist war, profiteering and a lack of planning.
Striking local government workers rally and march in Melbourne on 5 May 2026. Photo courtesy of ASU.
Workers are having none of it! Achieving pay rises to both catch up and keep up has unionists — especially those in the public sector — ready to walk off the job. Even Sally McManus, the Secretary of the ACTU, recognises this, commenting that workers are “more prepared to go on strike than they have ever been.”
Frontline workers in Victorian public hospitals — among them ward clerks, cooks, cleaners, orderlies, allied health assistants — overwhelmingly rejected two sub-standard pay offers. They went on strike three times to force the Allan government to up its pay offer of nine percent over three years to 12.49 percent over two-and-half years, backdated to December 2025.
Nurses in New South Wales also walked off the job, demanding a 35 percent pay boost. After two years of campaigning, workers rejected the government’s offer of nine percent over three years. In April the union ended up in the Industrial Relations Commission. Registered nurses, who will remain among the lowest paid in Australia, will get 16 percent over three years with the first instalment backdated to July 2025.
Members of the Media Entertainment and Arts Alliance and the Community and Public Sector Union (CPSU) working in the Australian Broadcasting Commission rejected a measly 10 percent pay offer over three years. For the first time in two decades, the two unions went on strike together on 25 March and achieved a better offer.
Also downing tools are local government workers. The Australian Services Union at eight local councils in Melbourne is fighting for a 10 percent pay rise in the first year of their agreement and four percent in the second. On 7 April, waste workers at Darebin, Hume and Merri-bek councils and parking officers at Yarra, Maribyrnong and Melbourne struck for 24 hours in support of the campaign. Workers at those six councils, along with those at Greater Dandenong and Hobsons Bay, stopped work for 24 hours on 5 May and held a lively march on state parliament. They continue to enforce work bans in pursuit of their pay claims.
Public Sector health workers in the Medical Scientists Association of Victoria are fighting for a 28 percent pay increase over the four years of their next agreement. The Allan Labor government is offering just three percent a year.
In Tasmania, the government is able to find the funds to build a new football stadium. Yet it can’t offer wages that keep pace in real terms. Members of the Health and Community Services Union at Ambulance Tasmania, where low pay is leading to chronic understaffing, rejected an inadequate pay offer and are taking industrial action, including strict bans on overtime. Tasmanian public servants recently voted up a new enterprise agreement after 44 weeks of bargaining, backed by industrial action. While the pay increase — 8.75 percent over 3 years — is well below what’s needed, many workers will also get a further boost to their base rate, resulting in the actual figure being between 10.7 and 12.2 percent for most workers. Unionists also won five days’ reproductive leave, the right not to be on constant call and a range of new allowances, while defeating proposals to roll back conditions.
Victorian teachers and education staff staged a massive strike on 24 March in pursuit of a 35 percent pay claim, reduced class sizes and less class contact time. Schools were closed across the state. At least 40,000 workers — wearing red Australian Education Union t-shirts — packed the streets of central Melbourne for an unmissable mass rally. It’s an understatement to say that these workers are angry. They face underfunded workplaces, groaning workloads and low pay. Victorian teachers are paid as much as $15,000 a year less than those in NSW! Workers had bans in place and were ready to escalate the struggle this school term. Many were furious when the leadership paused the campaign of half-day rolling regional stoppages and rallies outside the offices of Members of Parliament. Dozens of sub branches and regions adopted angry resolutions demanding no compromise on the log of claims, which also addresses class sizes and burdensome administration. As we go to press, the officials have brokered an inadequate offer. This has triggered a tsunami of rank-and-file opposition, calls to fight on and vigorous organising in preparation for a “vote no” campaign.
Teachers in the Australian Capital Territory are also planning stoppages and bans over workload issues and in pursuit of more pay.
Members United for a fight. Workers in the Australian Public Service (APS) are preparing to begin bargaining; the current agreement expires in February 2027.
Members United, backed by the rank-and-file Democracy 4 CPSU Caucus, argues that the union must prepare to achieve the bargaining claim in full through a campaign, which goes far beyond that undertaken in 2023. The caucus highlights that the cumulative loss of real wages in the APS, over the period from 2019 to 2025, represents a 7.3 percent cut to wages. The CPSU bargaining claim is for an annual five percent or the equivalent of the Consumer Price Index, whichever is higher.
Speaking for Members United, Christopher Warren says, “with inflation rising, our claims are already very modest, so there is no ground to give. The CPSU must win our claims in full. That requires serious leadership to mobilise and empower the membership. Settling below our claims would mean asking CPSU members to absorb yet another real wage cut, and the voting membership will have very little appetite for that.”
There will be an election in the CPSU later this year. Among the platform, which the Members United will take to the election, is a plan to create a strike fund.
End the pay cuts and the war! With inflation predicted to rise to five or six percent in the months ahead, the choice for workers is stark: fight back or see wages continue plummeting. Rank-and-file projects to expand union democracy are central to what’s needed, as is a willingness to boldly use the democratic spaces already forged. Workers should not be made to pay for this war. That means organising at the grass roots to build and unite both a fighting union movement and an anti-imperialist, anti-Zionist anti-war movement.
Alison Thorne is a member of the Democracy 4 CPSU Caucus.
