Weak wages. You have to wonder if the federal government and much of business are on the same planet as most Australians, especially wage earners. Lots of talk about tax reform, negative gearing, the need for cuts to penalty rates and IR reform (as Qantas boss Alan Joyce called for on Tuesday, sounding like a stuck record), and yet as the Reserve Bank (and Crikey) has been pointing out for two years, wage costs and inflation are not a problem, nor are industrial relations, workplace disputes or any of the other buzz phrases beloved of the out-of-touch right of politics and business. And yesterday the Bureau of Statistics again produced another depressing Wage Price Index, this time for the December quarter (and note that none of the doubters of the ABS employment series doubts the accuracy of the Wage Price Index series). The December reading was the lowest since this series started in 1998 — 0.5% for the quarter and 2.2% for the year, down from 0.6% and 2.5% for 2014. Private wages only grew at 2.0% (a new low), and public sector wage growth was just 2.6%. With headline consumer inflation of 1.7% and underlying RBA measured inflation at just on 2.1%, employees were doing well to break even last year — especially in the private sector. — Glenn Dyer

Broadsword or epee, the damage is all the same. The softness of wages is a double-edged sword — it’s a drag on household income growth and hence consumer spending (but you wouldn’t think so, with retail sales up 4.1% in 2015 from 2014 a stronger performance than in the US or Japan or much of Europe and new car sales hitting another record last year and in January of this year). But as the RBA has pointed out, the weak wage growth is helping limit the upwards pressure on unemployment and improving the competitiveness of the Australian economy (unit labour costs haven’t risen in four years) and means that there is no inflationary pressure coming from wages — and the weak wages and demand is limiting the inflationary impact of the fall in the value of the Aussie dollar. — Glenn Dyer

Property shorts work? And finally, how clever are our dynamic property shorting duo, Jonathan Tepper and John Hempton? There they were betting on a house price collapse — being clever in discovering the high level of household debt (but not household savings or assets, it seems) and getting free publicity from 60 Minutes, The Financial Review and the rest of Fairfax, not to mention News Corp outlets. And yet they missed the big price fall in property — the collapse in the price of shares in recently listed real estate agent McGrath Ltd. McGrath shares fell 14.7% to $1.45 yesterday to take the slump since listing at $2 a share late last year, to 27%. The shares actually touched an all-time low of $1.37 in trading yesterday — a fall of almost 20% on the day. Investors didn’t like the clouded outlook the company presented yesterday as it gave a negative tinge to the coming months. — Glenn Dyer

Peter Fray

Fetch your first 12 weeks for $12

Here at Crikey, we saw a mighty surge in subscribers throughout 2020. Your support has been nothing short of amazing — we couldn’t have got through this year like no other without you, our readers.

If you haven’t joined us yet, fetch your first 12 weeks for $12 and start 2021 with the journalism you need to navigate whatever lies ahead.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW