What exactly is the government’s wages policy in the wake of the budget?
It’s claiming a damascene conversion to the need for wages growth and fiscal policies to achieve it, but it looks a lot more like Augustine’s “Lord make me pure, but not yet”.
If the budget forecasts are to be believed, the government is pumping extraordinary spending into the economy for what, over forward estimates, will be zero net real wages growth. They’ll fall this coming financial year, flatline from 2022 to 2024, and finally rise a small amount in 2025.
In his Insiders appearance yesterday, Treasurer Josh Frydenberg tap-danced around the looming real wages cut, blaming one-off changes in government charges and other costs for the “temporary” fall.
But there’s been nothing temporary about real wage falls for many workers in major industries like construction for most of the past decade, when wages growth has barely managed 2%. And general wages growth is still not going to reach 3% by 2025.
Last week Frydenberg got some media spin happening around a suggestion the government was supporting a minimum-wage rise by the Fair Work Commission (FWC). Not by actually calling for a wage rise, of course, but by advising the commission — a body now generously stacked with Coalition fellow-travellers — of the budget forecasts.
But the letter says nothing to contradict the government’s initial submission to the FWC in April, which warned of higher labour costs being “a major constraint to small business recovery”, and discouraged pay rises for low-paid female workers, while urging the FWC to exercise “caution” in deciding on any pay rise.
Frydenberg yesterday also declined to support wages growth for the aged care workforce — despite that being the only way we’re going to achieve the growth necessary in that workforce to match demand from an ageing population, let alone the staff increases required by the government’s reform in the sector.
It’s a shame David Speers didn’t raise another, much less subtle government policy to suppress wages — its cap on public sector wages growth to private sector levels (while the budget papers warned that state public sector wage caps would hold down wages!).
It’s pretty simple: if the government is serious about higher wages growth, it has a number of tools to employ: it can recommend a decent minimum pay rise to the FWC; it can lift public sector wages; it can urge state governments like NSW to do the same; and it can fund higher wages in the sectors it controls financially, like aged care.
It is choosing to do none of these and Australian workers are suffering real wage falls this year and next as a result.
This week will see the Wage Price Index (WPI) result for the March quarter, which is expected to be a rise of about 0.5% quarter on quarter for an annual rate of 1.4%.
That will be followed on Thursday by the jobs data for April. They’re likely to show only a small impact from the ending of JobKeeper on March 28 (which will be a fantastic result). Watch the differing emphases the government will place on the two numbers. If it focuses only on the latter and ignores the former (as it has been doing for years), it’ll show the government gets that it should be trying to lift wages, but its heart will simply never be in it.
I might be a dumb question, but what is the ‘neo-liberal’ goal of suppressing wage growth? Doesn’t it just mean we all have less money to buy stuff?
They think it’s what their “base” likes to hear.
By “base”, I think you mean their owners – people like uncle Rupert and auntie Gina, neither of whom will be happy until we’re all working for a dollar an hour.
I think the core belief of neo-liberal/neo-capitalism (whatever it’s called) is that the “industrious” ( for that read wealthy) should be rewarded continually. There doesn’t seem to be a recognition that the economy is a circular system. It’s a bit like having an engine, and you reward one part of the motor with oil and petrol in abundance, and starve the rest, yet somehow expect it all to continue running smoothly.
Viewing the economy as a constantly circulating system is a non-judgemental observation of how things work. Neo-capitalists seem driven by a heavily judgemental view, to not just reward those who are already thriving, but to punch down and penalise those who are not. They also turn a blind eye to the haves perpetually gaming the system to double down on their success, and forever block the have-nots from rising up.
Nowhere is this more blatantly apparent than in the different attitudes to businesses who profited from JobKeeper, versus welfare recipients suspected (often wrongly) of profiting from Newstart payments. The government is prepared to hunt you down like a dog for a couple of thousand dollars, but when it’s millions, they are happy to leave it up to the business owners whether or not they feel like paying it back.
It is a crazy take on economics that defies common sense, let alone basic decency, and cannot continue, no matter how much the neo-caps want to pretend.
There is a time when the inequality becomes too much, and the vast majority of have-nots will refuse to take it any longer.
Makes me wonder how the ALP would have handled the pandemic’s effects on the economy, Glenn. Would they have implemented a (much more targeted) welfare-like system to replace wages, rather than flinging cash at employers with few questions asked?
Probably!
The same initial policy would have been fine, hand it out fast because it is needed now, it just needs the same follow up standards that people get.
Job Keeper was the ALP plan implemented only after pressure.
This sort of socialist/social financial planning a
Is not within the DNA of the Libs
I don’t think the ALP would be any more averse to flinging cash at employers than the LNP – particularly if there were kickbacks to be had
You’re playing the ‘politics of envy’ there, Glenn.
Your first sentence hits the spot. How do we know when people are ‘industrious’? They make heaps of money. It’s self-evident!
Yes, it is a self-fulfilling definition. And it turns a blind eye to the fact that the industry leader (the good person by their definition) needs employees (the not as good people) to create their wealth, as well as around 4% unemployed people (scum of the earth) to prevent their economic model becoming inefficient. Why then punish the very people they need to keep their system working for them? It’s not even in their own long-term, selfish interests, but they don’t want to acknowledge it. Crazy.
Nah, that’s how we know they’re greedy and selfish. Industriousness doesn’t necessarily create much wealth as such.
Perhaps I’m a simpleton, but if the govt. got over their terror of upsetting the uber-wealthy and told filthy, money-grubbing scum like Gerry Harvey to pay back the Job Keeper money they stole maybe we could afford a proper quarantine facility to help repatriate Australians stuck o/s.
You’re not a simpleton, but if the government demanded corrupt payoffs back, they’d have to give back their kickbacks – and that’s not in their business plan.
Yes. Business are a special kind of stupid to want to cut the wages of there customer base. Less spending = less profits = less production = less jobs = less spending
Neo-liberal goals & logic are not compatible.
And if housing costs and power costs were contained by policies that allowed people to live in warm/cool homes with security and achievable costs, we wouldn’t need wage rises! And with all due respect to middle income earners, it’s really the people at the bottom that really need the wage rises!
Is there an imaginative alternative? For a start, raise the tax free threshold on those earnings and/or pensions less than $40,000pa. to $30,000. Next Separate out those industries that are low paid and community service oriented, Childcare, Aged care, Disability care, and maybe some others, and raise the tax free threshold to $40,000, therefore giving that cohort a reason to work in the industry, an immediate pay rise, and allows MORE staffing levels in all those areas to be increased WITHOUT dramatically increasing costs to the operators!
Learn MMT, taxes DON’T fund spending!
Couldn’t agree more, but those kind of arguments and the whole MMT thing, don’t find much traction, even amongst Crikey journos or commenters. One day, I suppose…
They shouldn’t, yet they clearly do-given the massive focus of Conservative Governments towards balancing tax revenue against spending-which has pushed less conservative politicians to adopt a similar practice. You can largely blame the likes of Kennet and Howard for this change in focus.
Aged Care, and the recipients thereof, are doomed.
Leadership comes at a price. Worker(s) salaries reflect skill levels, commitment and . . . resource availability to deliver essential services. The Morrison Govt has absolutely no intent to rectify the inhumane treatment of older Australians.
The current LNP Government denial of their constitutional responsibility for delivery of aged care services, like quarantine and vaccination of all Australians, has no priority whatsoever. In God’s name, what was the expectation of the Aged Care Royal Commission other than to protect our parents and grandparents in the closing years of their lives?
This ‘new’ Australia bears no evidence of our Nation’s forebears who gave to us all a land that all other nation’s acknowledged and envied. Gone! Power and Greed succeed!
I agree – my understanding is that the Royal Commission recommended a 25% wage increase for carers working in the sector – but the government is opposing that before the Fair work people. Staffing was identified as the number one issue in Aged Care. What depresses me is that the money allocated to the sector in the budget will be wasted on ever more (incompetent) bureaucracy. I think it would serve Labor well to dig into just where all this money is going, and exactly what it is expected to achieve. We cannot allow this money to be wasted on a system which has been rightly castigated by the Commission. Staffing levels must be mandated and whatever is needed to attract and keep qualified staff must be put in place.
As well, add in so-called labour laws that are against unionism and severely restrict the legal right to strike. So, add in reforms that repeal all the severe restrictions against workers taking industrial action and hopefully overtime assisting wage increases.
I have. no doubt Frydenbergs vocal cords being LNP could not enunciate the words Wage Increase.