Wages growth in Australia continues to be in serious trouble. The official narrative is that wages are slowly picking up. In fact, workers in most industries saw wages growth fall in the March quarter — and often fall substantially.
Manufacturing is still a major employer of Australians — over 800,000 people make a living in that industry. But wages growth in manufacturing fell from 0.4% in the December quarter to 0.3% in the March quarter; annual growth in the year to March was a measly 2%.
Retail — where nearly 1.3 million Australians work — was even worse: from 0.5% in the December quarter to just 0.2% in March, taking annual growth down to 1.9%. Construction — over one million workers, and allegedly riven by the greedy demands of the CFMMEU — similarly saw growth fall from 0.5% to 0.2%. Annual growth was 1.8% — meaning construction workers didn’t get a real pay rise during the year, which doesn’t say much for the much-vaunted “militancy” of the CFMMEU. ICT and media, financial and insurance services, real estate, the massive professional services sector, public administration and arts and rec services all saw slowdowns in growth in the first quarter of 2019.
“Wages are starting to pick up,” Treasurer Josh Frydenberg insisted in March. He was wrong then and he’s even more wrong now. It’s even worse in the private sector, where wages growth accelerated in just five of 18 industries in the March quarter. It’ll be quite an impressive achievement if the government comes even close to its budget forecast of 2.5% wages growth target for this financial year — a forecast it has already downgraded since last year’s budget and three times since 2016.
No one — politically or in Treasury — is ever held to account for such blatant peddling of bullshit.
Perhaps that’s because the Reserve Bank has been in on the giggle. It endorsed the pollyannaish stupidity of wages growth slowly building momentum, dutifully claiming in each Statement of Monetary Policy for the last two years that wages growth would gradually pick up. The “pick up” ended up being a mighty 0.3 percentage points before grinding to a halt. Last May, the bank again declared that “wages growth is expected to pick up gradually, as spare capacity in the labour market declines and as any effects of structural factors that are weighing on wages growth start to dissipate.”
Problem was, the WPI then immediately stalled at 2.3%, and has been stuck there ever since. At least since late 2018 the bank’s forecasts have been creeping downward: last week’s SMP forecasts didn’t see WPI growth reaching 2.6% until mid-2021. By then, workers in some of our biggest industries will be approaching their ninth year of minimal wages growth and we’ll be within sight of a decade since wages grew at more than 3%.
This is a colossal failure by Australia’s governing class. Economists, business groups, commentators and politicians complain about rising populism and the lack of voter enthusiasm for yet more “economic reform”, while steadfastly ignoring that household income growth has been savaged. The Coalition has pursued a deliberate policy of wage stagnation that has crunched household income, driven down our national savings rate and undermined economic growth.
Business — similar in its stance to climate change action — says it supports higher wages growth but hysterically clutches its collective pearls at anything that might actually deliver that. The Fair Work Commission helped with its ideological, spiteful, attack on penalty rates which even business now admits led to none of the promised extra jobs. Treasury and the Reserve Bank supported the official cover story, that growth was just around the corner. And the media played along, especially the anti-worker Financial Review, the editor of which, Michael Stutchbury, has attacked people complaining about weak wages growth as “whingers”.
Hilariously, Stutchbury and co today demanded readers back the Coalition because “the coalition at least grasps that Australia needs a growth policy in order to lift incomes and sustainably pay for the services government provides”. That “growth policy” has delivered six years of stagnation that has left many workers with falling real incomes, and promises three more years of the same. Based on the evidence, the only incomes the government and the Financial Review appear to be interested in are those of shareholders.
“No one — politically or in Treasury — is ever held to account for such blatant peddling of bullshit.”
We know.
Have a word with your colleagues down the hall who attend Frydenberg’s pressers and let them know that their readers are beyond fed up with that, will you?
And when the Treasurer or anyone else in the government says low wages are a global phenomenon, ask why Brexit-paralaysed Britain has earnings growth of 3.5%.
As for Michael Stutchbury at the AFR, this is the champion of national news inquiry in the finance sector who said the calls for a banking Royal Commission were a beat up – just a couple of bad apples…..
The right to strike and union access to workplaces has been almost completely legislated out of existence in the past thirty years. Coupled with that is the clever campaign of getting workers indebted up to their ears so they can’t afford lengthy strikes – and outlawing strike pay to boot.
However I question blaming all this on politicians. No government anywhere at any time has ever had the welfare of workers as its main priority and I include the USSR and PRC. Workers are now foolish enough to seek help from human affairs departments rather than unions. Until they collectively realize that help can only come from organisations that exist primarily to help them this will continue. This will take a whole new fight though as business won’t easily give up their hard won legal and political gains. I’m unconvinced by professional econocrat claims that this is mainly about technological change. I’m sure it looks good theoretically in the cloistered offices but it’s not what I see out in the everyday world.
I quite like the convenience and ease of the modern no strikes world but it’s come at a heavy price to too many.
Agree mark. We are all the poorer for the loss of union influence. This helped provide safer and more equitable working conditions, make us a fairer society with a decent standard of living for most and a safety net for the not so lucky. These things apparently are not required for the new aspirational stuff you, I’m alright Australia.
The stagnation in wages growth is a direct result of coalition ideology and policies, they have stacked fairwork australia with their stooges while slashing penalty rates for holiday and weekend workers,emasculated the union movement, allowed the creation of fake contacting jobs while flooding Australia with cheap 457 visa and backpacker workers, all this is designed to put extreme downward pressure on workers wages and maximise business profits, while this works for multi nationals and big exporters it has the opposite effect on local and small business by massively cutting workers discretionary incomes which impacts on consumer spending and confidence and becuse the coalition linked pensions to cpi it also cuts increases to aged and disabilty pensions and constricts their spending which again impacts small and local business.
Well put.
The LNP has been in power for 17 of the past 23 years, and Labor had to deal with the GFC, hardly a good time to be pushing for higher wages. It’s not “politicians” in general who should be blamed, only LNP politicians.
By my guesstimate the LNP’s policies benefit the top 15% of Australian wealth holders, the global corporations, the CEO caste, and ultra-wealthy foreign shareholders.
Why so many of the remaining 85% of Australians vote for the interests of these parasites is truly puzzling.