Despite the political problem being created by wage stagnation, employers and employer groups — against their own interests — appear dedicated to trying to perpetuate it.
Wage stagnation, and associated perceptions of economic unfairness, are at the heart of the bitter resentment toward liberal economic policies across the west. Governments and central banks continue to insist that tighter labour markets will lead to higher wages, but either that simply isn’t happening (we quizzed some experts on why that is last year) or, in the United States, minimum wages have started rising but the “hollowing out” of middle incomes, leading to dramatically worse inequality, has continued apace. The political dislocation and economic policy retreats that have characterised the last couple of years will not end until wages growth returns.
For their part, Australian employers have been fighting a desperate rearguard action to protect neoliberalism, insisting that if only they could make higher profits, or get a big tax cut, they would gratefully shower workers with pay rises. That’s despite a whopping 20% rise in profits in the year to September 2017 — as compared to a decline of 0.3% in the comparable period in 2015-16. The purported link between higher profits and higher wages has been shown to be a lie.
Meantime, the clock is ticking on what would be Treasury’s sixth straight year of significantly overestimating wages growth. In MYEFO, the government downgraded its Wage Price Index growth forecast in the Budget from 2.5% to 2.25% — and it would have been surprising if it hadn’t after the truly rotten September quarter result of 0.5% seasonally adjusted. In fact, forecasts for WPI growth for every year of the Forward Estimates were cut by 0.25 percentage points, so officially we won’t now reach 3% wages growth until 2020. And September quarter data from enterprise bargaining agreements released this week confirmed that wages went backwards in the first quarter of the current financial year. That leaves a lot of ground to make up even to hit the revised 2017-18 2.25% target.
And when much of the jobs growth in Australia is coming in the health and education sectors, where wages are tightly controlled by government because they’re such big cost centres at the state level, the prospects for the kind of pick-up in wages growth that the government has been promising for the last twelve months looks problematic.
Employers, meanwhile — despite ample evidence from the retail sector that preventing wages growth damages demand — continue to try to cut wages. Aldi is the latest major employer to argue that it should be allowed to cut its workers’ wages rather than abide by the Fair Work Commission’s 2016 ruling against that shonky Coles/ Shoppies deal that led to workers being worse off (to give an idea of the Financial Review’s editorial stance, it placed that story in its “Leadership” section beside tales like “The JP Morgan Taliban-hunting accountant”). The Australian Chamber of Commerce and Industry’s James Pearson — a noted offender of good sense in industrial relations — was reported today contradicting the government by saying workers would just have to put up with stagnant wages for a while longer since employers didn’t feel like giving rises any time soon.
Then there’s the hysteria that a merger of the CFMEU and the MUA inspires in employers (and, for that matter, the government), despite considerable evidence that it is the diminution of union power that has undermined wages growth. Not to mention that the CFMEU’s capacity to use industrial thuggery to achieve wildly inflated wage results is entirely mythical. Any effort by unions to improve their weakened bargaining power is a threat to civilization, motherhood and, inevitably, jobs.
When the history of the life and death of neoliberalism is written, the accounts of these last stages will be fascinating, for the denialism and paralysis that it induced in its proponents in both political and business circles — even when they could have saved themselves by stopping their attacks on workers.
One just has to see the number of empty shops in retail strips such as Chapel Street in Melbourne to see the impact that low wages has.
Low wages, no expectations of growth in wages, huge mortgages eating every last cent of their wages. Damned people, the hide not to go into deeper debt to keep our employers in double digit profit growth.
Indeed, when retail goes belly up, and there are no wages, then it will just gradually eat its way into every sector of society.
Meanwhile, the treasurer continues to argue for tax breaks to the biggest of the corporate sector, rationalised by some hannukah miracle that the profits will go straight into the workers back pockets. Because!
Well argued Treasurer. Well argued BCA and ACCI.
Like it or not, and despite its undeniable occasional corrupt behaviour, the only thing that has ever achieved justice – both social and economic – for working class people has been the union movement. Until union membership levels are restored, nothing will change.
The Liberal Party is committed to establishing an Australian social order akin to the democracies of Ancient Greece. Freedom and political power for a very small ruling elite, built on the lives, bodies and souls of countless slaves.
If everybody is on a downhill wage slope, who do the employers think will be able to purchase their ticky-tacky retail crapola? No mon, no fun.
Bernard loves to pick on the easy targets of supermarkets and coffee shops but an Aldi worker has a higher hourly rate, even allowing for casual rates if applicable, than the award for a qualified motor mechanic with many years experience. I occasionally work with a young mechanic who stacks shelves in his free time because the pay is better than fixing cars. The distribution of wealth problem is wide-spread and it didn’t start with neoliberalism.
I thought your young mechanic anecdote may have been an exaggeration but a tiny bit of research suggests that the $24.30 Aldi offered is indeed better than the mechanics average rate of $22.40 .
Of course those figures are not an endorsement of Aldi but a reminder of the dismal lot of the “average” wage earner in this healthy wealthy first world country of ours.