It speaks volumes about how skewed our politics — and the media reporting of it — has become that Anthony Albanese saying workers’ real wages should not fall is deemed controversial by the press and denounced by Scott Morrison.
In an election (wrongly) labelled as about nothing, at least we have a strikingly clear distinction on a basic economic issue: Labor doesn’t want real wages to fall, while the official Morrison position — backed by the media — is that anything less than a substantial fall in real wages is “economic vandalism”.
Remember, Australian workers have slightly lower real wages now than they did in 2013, so the fall in real wages demanded by Morrison, the media and business will be on top of a near-decade of zero growth for households — something most of the media, with some important exceptions like Ross Gittins, ignored.
The febrile reaction is also at odds with the insistence, until recently, from the government that wages growth would finally start happening after a decade of stagnation due to low unemployment. That’s now at an end — it’s time to go back to falling real wages, according to Morrison, offering the Coalition equivalent of what John Howard dubbed under Paul Keating “five minutes of economic sunshine”.
Throughout the period of Coalition rule, the position of employers, backed by the government, has been that they couldn’t afford any pay rises, and that they would come at the expense of job growth. Now, when the labour market is approaching full employment, the argument is that they would be inflationary. Under this logic, there’s never a good time for a pay rise.
Morrison says that there’s no magic wand to lift wages, and that businesses raise wages, not government (ignoring that he’s the biggest employer in the country, and was told by Reserve Bank governor Philip Lowe to ditch his public sector wage cap to help wages growth).
But the history of the past decade is Australian businesses don’t lift wages. What they do is use multi-year enterprise agreements to lock workers into lower wages growth, demand increases in immigration to put downward pressure on wages, rely on the Coalition stacking the Fair Work Commission with employer group representatives and Coalition mates, and engage in economy-wide wage theft that has left workers out of pocket by billions.
And all along profits rose at the expense of wages, with the profit share of income surging from 2015 at the expense of the labour share — it currently stands near the all-time high level of 2020 — with real unit labour costs falling 9% between 2015 and 2021. Employers have banked all that, while ordinary households were stuck with real wages at 2013 levels.
But there’s more to the wages issue than inflation.
Suppressing household incomes, guaranteeing ordinary working families can’t get ahead because of stagnant pay and falling real wages, is a recipe for more than the economic impacts of poor income growth (to wit, GDP growth mired in the 2s as it has been for most of the past decade). It’s a recipe for growing alienation and resentment among working people.
Lowe alluded to this in 2018, saying “slow wages growth is diminishing our sense of shared prosperity. If this remains the case, it can make needed economic reforms more difficult.”
But the result goes beyond antipathy to “reform”: to greater support for populist politicians who propose to disrupt the whole rotten system and who offer simplistic solutions (like the fixed interest rate rubbish Clive Palmer is peddling). After all, what stake do workers have in a system under which they can never get ahead, in which there’s always an excuse for their real wages to be cut?
So where can a 5.1% pay rise come from without driving up prices? It can come from the greater profit share companies have amassed in recent years. Or it can come from the colossal profits that some of our biggest companies pay without contributing a cent in tax. (Too bad Labor is refusing to fix up the rotten petroleum rent resource tax to collect some windfall profits from surging energy prices — we could learn a lot from Italian Prime Minister Mario Draghi, the former head of the European Central Bank, who has imposed an initial 10%, now 25%, windfall profits tax on energy companies in Italy. Just imagine doing that here.)
And it can from the $40-odd billion in JobKeeper that Josh Frydenberg gave to companies unnecessarily. As that forensic foe of JobKeeper, The Australian Financial Review’s Joe Aston pointed out today, where did the bulk of the approximately $112,000 per job saved by JobKeeper go? “To subsidise private schools, megachurches, car yards and retailers like Harvey Norman already revelling in the best trading conditions they’ve ever seen.”
Albanese should welcome the feral reaction to his monstrous idea that workers shouldn’t go backwards for reasons that have nothing to do with them. And he should signal, loud and clear, to voters tempted to see the whole political and economic game as rigged against them, that as prime minister he’s not prepared to tolerate it. It might do more for politics than just winning an election.
Spot on again BK – you are on fire ..!!
Well done, your good sense is much appreciated, just wish your work was more widely promulgated.
So are you – spot on, that is. This is one of BK’s very best pieces, showing the inflation-whingers for what they are as they go bananas over poor people wanting to be able to afford to exist. Lots of investment-propertied, soon to be almost flat-taxed, people complaining about $1 an hour more for those who already can’t afford to pay rents demanded by those slum-lords that are 21% higher on average than they were a year ago. This article should be on the front page of any newspaper, rather than the condescending ‘the poor are their own worst enemy’ pontifications from the ‘economics’ and ‘business’ mumbo-jumbo brigade. Some employers would like there to be no minimum wage level; some get around it anyway by importing workers to do horrible work for horrible pay for horrible bosses. I say, in the spirit of Corporal Jones, ‘Stick it right up ’em, Albo!’
Don’t worry Fairmind, Crikey has far more impact than corrupt politicians and News Corp editors and journalists would like!
On ABC News breakfast this morning, a man in an expensive suit (I think he was from the business council) said that $1 an hour pay rise is unaffordable for business. Ahh the irony. #eattherich
Just heard on ABC radio that the ‘man in an expensive suit’ executive types have had a salary increase on average of 20%+ over the past nine years. Hypocrites much!!!
get your comrades to go hard on wage fairness, cml…seize the day!!! seize the field!!!
change the world.
At some point it would be good if just one journalist would ask the PM or Treasurer, “Under what conditions would you support a wage rise?” It’s clearly not when the economy is growing too fast, or too slow, ditto employment high or low. If they were honest (cue sarcastic laughter) they would say, only individuals may deserve pay rises under conditions the employer deigns as conducive to them.
A self-serving economic approach on an intellectual par with treating the national budget as a household one. A good way of saying we don’t hold the hose yet again, while actually instead adding fuel to the fire.
Rising wages both improve the distribution of our commonly produced wealth and push management to look for multi-factorial productivity growth, something we are short of. Rising inequality, via wages falling, results in a higher share of wealth going to the business minority and creates a dispirited or resentful population, who can be offered scapegoats and anger outlets by the populist right. Politically and economically Labor’s position makes sense for both the bulk of the electorate and themselves.
Many of the multinationals that run this country operate in third-world countries and pay their workers a starvation wage because they can. The evil managers and accountants are rewarded with bonuses for paying starvartion wages. Are we going to allow the multinationals and the Liberal ?CP/National minority government to balance their budget by starving workers?
Are we going to continue to depreciate the minimum wage, hand out grants, and condone rort to satisfy tax cheats from overseas
No doubt you remember Gina Rinehart, back in 2012, said Aussie workers’ pay needs to compete with Africans who get $2/day. Good of her to lay her cards on the table in public for once. I doubt her views have shifted much since then.
At least Gina was so moved by Barnaby’s financial strife after sharing his struggle surviving on a back bencher’s pay she gifted him a huge fake cheque to see him right…
Agree, which it’s why it’s disingenuous at best for the LNP to bang on about small business being unable to afford $1 an hour wage increase. The main employers in this country are big business and the public service, not Mum and Dad outfits with a couple of employees. I just hope Labor can get this message across.
Those multinationals may pay the workers a starvation wage, but in Qatar they pay the tiny royal family twenty times the royalties for their gas than they pay Australia’s 26 million owners of our natural resources.
The race to the bottom. Perhaps, but only perhaps, electing Albanese is a very slight risk. Re-electing Morrison is madness.
It’s along the lines of ‘gov’t budget is the same as a household budget’ or ‘raising min wage increases prices’ – both debunked for decades but illiterate journo’s keep parroting.
Why aren’t Gareth Hutchens or even Richard Denniss all over the ABC to put down Morrison’s BS.
Even Labour misses a trick by ignoring the fact that the working age cohort has passed its ‘demographic sweet spot’ OECD, 2020) yet budgets are partially dependent upon the same PAYE taxpayers who provide near 30% of budget revenue vs. more retirees and/or pensioners tugging on budgets; something has to give?
One derives immense satisfaction from seeing a credible journalist write something that you have thought for so long and would write yourself if only you had a national media (not ‘social’ media) platform on which to do it. Well done BK!
Labor go after the mining companies?
Did you forget what happened last time?
Unless they get in, and unless they get a friendly senate, and unless they’re willing to say “go ahead, threaten to sack some front end miners” nothing will change
Not likely, even less HOPE and thirdly NOT A CHANCE!