Everyone can relax about wages growth. It’s all fixed, according to business, in the wake of yesterday’s 3.1% annual growth for the September quarter in the wage price index.
“Businesses are delivering the strongest rate of wages growth in a decade,” said Business Council head Jennifer Westacott, warning of “the harmful unintended consequences of a massively expanded multiemployer bargaining stream”.
“Australians can’t afford a system that slows down this strong private sector wages growth,” she piously noted.
At the Australian Industry Group, Innes “the workers’ friend” Willox said “the increase in the wage price index released by the ABS today shows that the pace of wages growth is picking up strongly. This is occurring without the assistance of the heavy-handed provisions in the government’s IR bill currently in the Parliament … The pick-up in wages growth is occurring organically.”
It’s true that private sector wages growth, at 3.4% in annual terms, hasn’t been this high since December 2012, when Labor was last in power.
But it’s mostly down to the Fair Work Commission’s (FWC) annual wage decision in June to give the lowest paid a substantial pay rise, or $40 a week, with the encouragement of the government. According to the Australian Bureau of Statistics, this decision “was a significant contributor to hourly wage rate increases in the retail trade, administrative and support services, accommodation and food services, public administration and safety and health care and social assistance industries”.
Retailing, which saw the highest growth of all (4.2%) was also helped by a one-off situation of two award increases within the year.
Together, all those sectors affected by the FWC ruling account for 5.6 million workers or more than 40% of the entire workforce. Sorry, Innes, but the FWC forcing employers to substantially lift wages for Australia’s worst-off workers ain’t “organic”.
If you want to know what was happening “organically”, there’s the transport sector (2.5% annual growth), education (2.2%), utilities (2.9%) or mining (2.7%), along with stronger sectors like construction (3.4%) or manufacturing (3.6%).
The irony of business boasting of the strongest wages growth in a decade is that in December 2012, unemployment was 5.4% — nearly two points higher than the 3.5% it averaged in the September quarter. Nothing more clearly demonstrates just how broken the industrial relations system is than that comparison.
The other irony is that business is declaring wages are all sorted when — as a direct result of the actions of business — real wages are falling rapidly. The consumer price index rose 1.8% in the three months to September for an annual rate of 7.7%. That means real wages fell over the year to September by 4.3% for private sector workers and 5.3% for public sector workers, for whom wages growth is still a distant memory. That rushing sound you can hear is your income plummeting.
When workers are going backwards that fast as a result not merely of externally sourced inflation but businesses increasing profits, it takes real chutzpah for business to declare victory. The only victory on the wages front is that of the businesses that Westacott and Willox represent, not their workers.
The extent to which organic, fair trade, gluten-free wages growth is now occurring — long past the point when labour market economists insisted it should have, and still at levels well below a decade ago (WPI growth reached 4% for private sector workers in 2011) — suggests that the labour market continues to fail to translate demand for labour into significantly higher wages, even in sectors seeing strong growth.
In short, it’s compelling evidence the government really does need to change the rules of the industrial relations system to stop employers from facing the full consequences of higher demand for labour.
Given inflation has gone up more than wages, I don’t know how anyone could pretend that workers are getting anything other than screwed in real terms.
Great piece.
Notwithstanding have you seen the price rises in the luxury car market?
CEO’s are doing it as tough as anyone.
Hi Kimba, ‘CEO’s are doing it as tough as anyone’
Man I love your sense of humour.. You cannot possibly know how many tears I shed for our poor struggling business elite, how many sleepless nights!!!
I guess on the positive side it means I just don’t have any time left to worry about those in poverty despite working two jobs, the homeless and the powerless who get screwed over by things like robo-debt and wage theft.
We make or hear a lot of noise about the ‘bubble’ that politicians and their media devotees live in but it’s not the only bubble. Ms Westacott has demonstrated time and again that the BCA and those who align with it live in a bubble that is impermeable to reality. Sort of reminiscent of the bubble that donnie and gina must struggle to live in one would guess.
Innes Willox resides in the same bubble.
That characterisation assumes these ghouls’ MO isn’t disingenuous twaddle.
In essence it has been the breaking of union power that has contributed to a more compliant workforce and wage stagnation in Australia.. In Australia with union membership down to around only about 14% of the workforce and unions largely defanged the balance of power in terms of wages levels/bargaining has markedly shifted to the employers and fat cats like Westacott – who interestingly goes to great lengths to keep her remuneration package a secret. Some of the most equal nations in the world are the Nordic states such as Norway and Sweden quite simply because they have more powerful union organizations to fight for greater equality in the distribution of income and wealth from the profits of work unlike the situation in Australia.
Westacott and her fellow fat cat leeches push the line that the current social order/industrial landscape is the best one for all when In fact it is best for the wealthy elite and those in power. She then puts forward spurious claims of just how the existing system is working for the benefit of the lower paid and hence must not be changed less ‘dire’ consequences follow. This is a blatant lie as the only ones any change would have ‘;dire’’ consequences for would be Westacott and her kind as power shifts from them to the workers. The term ‘false consciousness’ is sometimes used to describe such a situation
While Marx did not invent the term he uses it to describe a situation where the low paid are lead to falsely believe that the wealthy have the interests/well being of the poor in their hearts. Marx draws upon the term ‘false consciousness’ in his explanation of capitalism as strongly built around some dominant or hegemonic ideology whereby the many are led to believe and support ‘that’ something is natural and logical even when it may cut across their own interests and well being.
As nice as it is to see a journo calling business lobby groups liars, it sure ain’t news.