After yesterday’s wage price index figures showed most of Australia’s workers currently have declining real wages and have now had three straight quarters of below 2% annual growth, you’d have thought many of those who have long demanded wage cuts would be cheering.
But, surprisingly, there was silence. The Australian Financial Review had little to say about it beyond Jacob Greber’s coverage. The masthead that has long called for more industrial relations deregulation and lamented how Australia is a “high cost economy” didn’t cheer. Then-JPMorgan Australia chief economist Stephen Walters, who in 2014 demanded “real wages have to come down” didn’t grace its pages to voice his approval, or that of the Australian Institute of Company Directors, where he now works.
Nor did other business groups. The Business Council was silent; Jennifer Westacott didn’t break cover to find yet another way of putting her foot in it on the subject. BCA chairman Grant King did mention low wages growth in an op-ed yesterday morning, before the release of the figures. The lack of wages growth, he observed, was “a real issue for all working Australians” — the kind of profound insight that explains why the BCA is so well-regarded these days.
The normally voluble James Pearson of the Australian Chamber of Commerce and Industry, always happy to demand lower wages, didn’t issue a cheerful media release. Long-time IR deregulation advocate Innes Willox of the Australian Industry Group couldn’t be found to laud wage cuts. Tasmanian backbencher Eric Abetz, who in 2014 warned of a wages explosion, expressed no satisfaction that the serious threat to the economy he identified three years ago had been neutralised. Nor did any of his backbench colleagues step forward to celebrate declining real wages, despite the Liberal Party for decades calling for wage cuts. Surely, if nothing else, this government has been successful in implementing a core Liberal policy? Nary a word.
Strange. It’s almost as if, despite demanding that Australian workers have their wages cut as an instinctive reflex for decades, they don’t want to be associated with it when it happens. Judith Sloan at The Australian, at least, devoted a piece to exploring why exactly wages are stagnant here and in other western economies.
Nor is this the first time real wages have fallen in recent years. It happened in 2013-14, too — back when inflation was a whopping 3%. Now it’s 2.1%, but wages growth has fallen even further. And yet, since then, business has successfully pushed for the Fair Work Commission (allegedly an inflexible, Labor-created impediment to workplace productivity) to cut penalty rates.
Perhaps the penny has started to drop within business that cutting wages weakens demand. Or perhaps not. The retail sector, after all, has been among the most vociferous in calling for penalty rate cuts, apparently oblivious to the impact of cutting the wages of low-income earners who spend a greater proportion of their income than the rest of us, despite experiencing first hand the result of wages stagnation via flat and falling retail turnover in recent quarters, with three of the last four months producing negative sales growth.
The government’s wages growth plan is, apparently, to keep forecasting it will get better in the hope that eventually it will, even as it tells the Fair Work Commission to go easy on minimum wage increases — which don’t help the poor anyway, it says. Business’ wage growth plan is to keep calling for more IR deregulation and company tax cuts (that’s the business plan for everything; if aliens invaded Earth tomorrow, the Business Council would call for an urgent tax cut to help repel them). Many of Australia’s largest companies and lobby groups are currently lamenting that Australians don’t like or appreciate them. Funny that.