The Coalition’s wage stagnation policy has delivered yet again, with wages growth failing to shift in the March quarter. The seasonally adjusted Wage Price Index rose just 0.5%, according to the Australian Bureau of Statistics; for the third quarter in a row, annual growth stalled at 2.3%, making a mockery of government and Reserve Bank claims of a gradual recovery in wages growth.
For once, private sector workers did better than public servants, with public wages growth at 0.4% compared to 0.5% for everyone else.
Things are especially grim in Western Australia, where private sector wages growth rose just 1.7%. Victoria was the strongest of the mainland states with private sector growth of 2.6%, where NSW managed 2.3%. And once again it was the government-funded sectors of health and social care (0.6% for both public and private sectors) and education (0.7%) that drove most of the growth; this time transport and warehousing helped out as well (0.7%). Health and social care, driven by heavy government investments, is the only sector to manage 3% wages growth over the year to March. Without that, the total wages growth figure would be substantially lower.
On the eve of a tight election contest, the data is a vivid demonstration of how the government’s wilful refusal to do anything to lift wages — and in the case of penalty rates, support their fall — has dudded workers as businesses have enjoyed surging profits. Bill Shorten committed to make the election a referendum on wages — in which case, the choice is pretty clear.
And don’t expect any substantial wages growth in coming years. Buried in last Friday’s second Statement on Monetary Policy for the year from the Reserve Bank was this admission:
If the labour market improves by more than forecast, wages growth and labour income growth may increase by more than expected. However, wages growth may also be slower to pick up than forecast. Recent international evidence indicates that it can take longer for significant wage pressures to build than previous experience suggests. Much of the increase to date in domestic wages growth reflects a decline in the prevalence of wage freezes, rather than an increase in the typical size of wage increases when they are delivered.
In other words, the rises in the WPI from 1.9% annual in the June, 2017 quarter to 2.3% in the December quarter has been driven not by more generous employers but by the ending of employer imposed freezes on wages (especially prevalent in some sections of the Commonwealth public service). Any rises workers are experiencing are really catch-ups. And the central bank pointed out that no relief can be expected on the factors driving slow wage growth.
The central forecast assumes that some of the factors that have weighed on wages growth over recent years, including low productivity growth and changes in competitive dynamics such as globalisation, will continue to put downward pressure on wages growth for some time yet.
In its most recent statement, the RBA wound back its forecast for the WPI for June 2019 after bumping it up in February. The June forecast in the monetary policy statement is now 2.4%, down from 2.5%, but the RBA still thinks we’ll make 2.5% by year’s end and 2.6% by 2021.
By then workers will be nearing a decade of wage stagnation, with higher growth eternally promised and never arriving.
Total wages are around $900 billion, 47.1% of GDP (which is $1.9 trillion). Therefore each 1% increase in average wages delivers a $9 billion injection into the economy, as it would all be spent
Conversely, the fact that wages grew in the year to March by only 2.3% compared to forecast growth of 3.3% means a $9 billion extraction from the economy.
No wonder the economy is stagnant.
Who is going to inject the money? – Not small business -which constitute 90+% of employers in the country are just making ends meet – won’t even be able to afford to subscribe to Crickey
The only beneficiaries of the Labor government will be the already employed public servants.
Any increase in wages will be spent, and the beneficiaries will be small businesses. The slowdown over the last six years has been increasingly driven by people not having disposable income to spend.
As most small businesses rely on people buying goods and services from them, it would seem that they would benefit from their customers having more money to buy those goods and services. Even if their own labour costs are increased.
It is an unarguable proposition that the rich are different – poor people spend their money, thus keeping the economy going whereas the rich hoard theirs and charge other people to use it… which is why it’s called usury.
The post GFC austerity policies in the UK of the Cameroon & his Bumnosed Baronet Chancellor pole- axed the economy for a decade and it still hasn’t climbed up to pre 2007 levels.
Labor leader and class traitor Shorten has adopted his customary position of class treachery with regard to a general wage rise – in a speech to the John Curtin Research Centre in Oct ’17 he urged employers to give workers a pay rise, emphasising that cooperation – the bosses’ approval – was the only mechanism he would support. Despite pretending to warn that the creeping Americanisation of the labour market was damaging the economy as much as it was driving inequality, all he will do is ask nicely for a pay rise, to which Shorten is happy to take ‘no” for an answer. His own pay is guaranteed to go up.
Shorten’s appalling scheme to have pay rises paid by government demonstrates how successfully business is being assisted to take without giving. It creates wealth, yes, but without sharing any, assisted by both the Coalition and Labor’s class traitors.
It is past time for serious remedies to improve the wages and rights of workers, especially given the precariat created by the casualisation, automation and globalisation of work. Only government can do that.
One is to seriously revise grossly anti-worker labour laws to give workers and unions more power, not least the basic human right of withdrawing their labour without notice. Another, to return arbitral powers in full to the Fair Work Commission (the successor of the AIRC). After all, it now has the broader Corporations power to rely on rather than the Conciliation & Arbitration power. “Allowable matters”, as well as most of the prerequisites for withdrawal of labour, should be repealed, and industry awards be returned.
Well, mince meat went up 17% just recently which is approximately 10 years worth of CPI. I was told by a distributor that this was partly due to massive export demands on ‘ground’ meat. I asked him once this overseas demand quietens down, would the current elevated price go down too. His response was a categorical NO.
My point being that anyone that uses the argument that wage growth has been kind of in-line with the CPI and thus there isn’t any real problem (i.e. Frydenburg), is nothing but an unctuous charlatan.