It says something about the shallowness of public policy debate in Australia that much of the commentariat and most of the business community is still obsessing about the need for economic reform (company tax cuts, industrial relations deregulation, cutting red tape etc) even as evidence grows that wage stagnation is the key economic and political challenge. It has taken the governor of the Reserve Bank saying wage stagnation is a major problem and a roadblock to economic reform to get many commentators seriously interested in it — and only then to argue that the easiest way to increase wages is to give employers greater powers to slash wages.
Well, more evidence emerged today, as economic thinktank CEDA holds its annual shindig in Canberra on “shifting the dial” on economic reform. It also released polling from a 3000-strong sample on community perceptions around reform, and the results — summarised in this graph — are utterly dire.
This is a picture of the failure of Australia’s governing class — politicians, bureaucrats, business people and the media — to ensure that citizens believe the economic and political systems work for them, not for the wealthy and powerful. People think big business, the wealthy and foreigners have got most of the benefits of economic reform, while they, and ordinary workers, have got few of them. That 84% of people say they have gained little or nothing from economic growth is remarkable — they’re certainly wrong, yes, but the result conveys the disenchantment about the entire Reform narrative.
And nothing quite says “the system isn’t working for you” like little or no real wages growth while executives and corporations make a motza.
Overseas, where wage stagnation has been deeper, or longer, or both, the debate is more advanced. There is a lot of work being done by academic economists on how the power of corporations (which under thirty years of neoliberalism has dramatically increased) is working to hold down wages, and how maybe our simple supply-and-demand-based model of the labour market is wrong. Some are arguing that the basic relationship between unemployment and wages growth has completely broken down, and the gig economy is to blame. The ACTU, which has been campaigning against the broader phenomenon of casualisation for years, would likely agree.
It’s a little early to say that the laws of supply and demand for workers have entirely broken down — the problem might be how we measure that supply and demand. One issue is underemployment — something the Reserve Bank has been onto for a while, with its stress that there remains unused capacity in the labour market despite strong jobs growth. Indeed, ABS jobs data shows that underemployment in Australia has been rising in recent years — with the gap between the unemployment rate and underemployment widening from about 2014 to, now, around three percentage points. That may well be the gig economy in action. The other issue, of course, is that we’ve taken away from workers one of the primary means of turning labour market pressures into higher wages — unions and striking.
Even CEDA, despite its polling, is offering a “business as usual” agenda, with a procession of business figures, government ministers and former bureaucrats, while Bill Shorten (and Tim Gartrell) effectively represent progressive politics. Much of the commentariat — especially in reactionary redoubts like The Australian, The Financial Review and the Business Council branch of the Liberal Party — is stuck in a “the beatings will continue until morale improves” approach to the problem of why the community won’t support their beloved Reform. But the “dial” that needs to be shifted is the power balance between corporations and citizens, workers and consumers, not in some magical new way of presenting and selling Reform that people see as just more of the same bad deal they’re getting now. And the way to measure that shift is in corporations being forced to pay their workers substantially more. The problem is, we have a government that is working hard to shift it the other way.
The government needs to represent worker and community interests, not corporate interests for a change. This includes ditching it’s obsession about budget deficits, institute a job guarantee (because business is not prepared to provide jobs for all) and provide more rights for workers.
We can add to this list of “business as usual” approaches the tiresome tendency of commentators in the centrist media (eg: Bernard) to STILL take at face value that the business community/LNP are even remotely interested in increasing wages or achieving a “fair” society.
They STILL embrace of the narrative that the LNP and fellow eco-rats genuinely want wealth to “trickle down” – apparently they’re just wearing ideological blinkers and just refuse to see the error of their modelling!
I mean, there is no possible way this could be DELIBERATE, is there? It’s not like people with entrenched power inevitably reach a point where they can only elevate themselves further by pushing other people DOWN.
The fact that society is gradually regressing into the feudal landowner/serf dynamic must just be some unfortunate accident or wilful economic blindness!
The systematic replacement of the welfare State with a police State, the budget revenue time-bombs that will inevitably be used to slash services…hey, I’m sure this is all being done with the best of intentions!
Mathias Cormann for PM…he’s such a good negotiator!
Agree with you about Cormann for Lib leader, he has the right tenacity to lead them for the next 20 years in the opposition boondocks.
The old saying “there is no-one more helpless than those trapped on blaming others” might be applicable. Please read my comment on acting upon the law of supply and demand.
I agree, Damian, with everything you have said. I am continually astounded that there are people who think the government is actually trying to do something good for us, despite all the obvious evidence to the contrary. And yes, they are going down a deliberate path for the benefit of their cronies. It amuses me (well, its despair actually) when people still talk about Liberal and Labour parties, as though it isn’t all of a peace now. Cronies here and cronies there.
“The problem is, we have a government that is working hard to shift it the other way”. That is only part of the problem. The real problem is that the voting sheeples are easily fooled, and always seeem to vote for political parties that do them the most economic harm.
I read that the Burnie aspirational care worker that Malfeasance Turnbull was recently dribbling on and on about, has been appointed as a member of the Burnie Port Authority Board. It pays a lot more than the low wages she is/was on as a carer. That said, there is a lot of / only fake news out there.
It says a lot about the shallowness of our commentariate gene pool.
Casualised work, tenuous employment, AI, mechanisation – behind that arass – I wonder how far into the future it will be realised that companies should be paying more tax not less. Especially those that don’t pay any now. To keep society ticking over?
Any voter who believes the LNP is taking us us in the right economic direction should read “Boomerang” by Michael Lewis, a cracking short read that shows the emerging disasters in many US states and cities where tax collections can no longer provide basic services.
Turnbull and Morrison obviously think that is a great future to aspure to.
“People think big business, the wealthy and foreigners have got most of the benefits of economic reform, while they, and ordinary workers, have got few of them.”
They’d be right about that. Sure, everyone, well nearly everyone, has benefitted somewhat, except perhaps the unemployed, the under-employed, the gig economy workers, western governments bleeding revenue, those on minimum wages, anyone who pays an electricity or gas bill, anyone who bought a house at the wrong part of the cycle or are at critical limits with the mortgage because the banks loaned them more money than fiscally prudent, anyone trying to get a quality internet connection after the NBN has gone through (thank god I’m last on the list), anyone who received financial advice from one of the thousands of examples being looked at by the Royal Commission.
And what did the great period of economic expansion ever do for us?