Wage growth remain completely flat in the year to June, wage price index data from the Australian Bureau of Statistics showed on Wednesday.
The wage price index grew 0.5% in the June quarter and 1.9% in the year to June, seasonally adjusted, matching the June annual inflation result, meaning there was no real wages growth during the year. The results are exactly the same as the March and December 2016 quarters.
For private sector workers, however, growth was lower at 0.4% and 1.8% seasonally adjusted, meaning they had a small real wage cut. Again, the numbers are the same as those for most of the 2016-17 year; the ABS described the private sector numbers as “the longest period of low growth so far in the series”.
The reason for continued stagnation of wages has eluded policymakers and commentators, with many insisting wage growth will simply bounce back and some linking it to productivity growth. There is no evidence yet of such a bounce, and some commentators might need to think about working out a new story. That’s also the government’s strategy on the issue. In the 2016-17 budget, the government confidently predicted 2.5% wages growth for this year. By the time of this year’s budget, that prediction had fallen to 2% — still too high. The budget predicted that wages would surge to 2.5% growth in the current financial year — the same as the ill-fated 2016 prediction.
One of the few sectors to record strong growth was health and social care (2.3% annual growth), which in addition to being in the public sector and more heavily unionised, meaning it has higher wages growth, is continuing to grow its workforce rapidly.
This number is important because if there’s one single piece of economic data that explains much of the discontent sweeping not just Australia but much of the West at the moment, it’s wages growth, which is stuck either at low levels despite full employment (as in the US) or at zero real growth despite low unemployment (Australia) or falling real growth in the UK and some European countries. Workers are unwilling to support market economics if it doesn’t deliver rising wages, and that’s translating into support for economic interventionists from the left and the right.
Meantime, business continues to demand that workers accept pay cuts and more “flexible” industrial relations laws …
The social contract is broken – abandoned by the moneyed groups. So long as they can take their money and run they don’t really care.
Surely congratulations are owed this Limited News Party government (holding down the Treasury benches for 15 of the last 21 years) and their corporate sponsors, patrons and donors (take a bow Westacott and pals), for whom they’ve delivered this bounty of a constipated economy, and more unaffordable homes?
(“Economist : Someone steeped in an unerring abiliy to predict the past”?)
“One of the few sectors to record strong growth was health and social care (2.3% annual growth), which in addition to being in the public sector and more heavily unionised, ….”
While this is a complex problem, with no simple solution, it seems key to me that the demise of unions is very much a factor.
And unfortunately, no amount of academic study and rigour will be able to discern exactly what is causing it, so charges that any suggestions are anecdotal are moot. Anecdotal is all we will ever have. Treasury studies suggesting that ‘tech change’ was the major culprit are more flawed than anecdotal evidence.
Along with this, may I suggest record immigration rates, particularly for the professional class under the ‘skilled migration’ program also add to the downward pressure on wages.
It may be anecdotal, but it least it is a direct and linear cause and effect, rather than an obfuscated, arcane and entirely theoretical attempt to explain it.
Taking Brekky’s point, if unions really (want to) have a future – by no means certain, given how easily so many collude with capital – it should be in the one area that will without doubt grow & grow, commanding most of the assets not currently & routinely offshore.
Given the Boomer demographic now on the wrong side of 60, “strong growth (in) health and social care” is the future.
If the kids want to inherit, they better make sure the oldies are happy & comfortable in their declining years and strong unionism amongst the care givers is the only way of ensuring that.
Rock’n’Roll retirement homes, staffed by well paid, much appreciated workers will underpin social harmony like nothing else on the horizon.
I find it staggering how government is allowing the decline and abuse in this area – you have to wonder who’s buttering their bread – to the detriment of the declining and defenceless?
What this government is prepared to gamble for “a line of (dis)credit”?
Imagine if the country’s CEOs were subject to “productivity clauses”?