The fact that several retail associations wanted either a zero real wage rise or a real wage cut on minimum wage employees has attracted some media attention in relation to the Fair Work Commission’s current minimum wage inquiry; less so their reasons. One particularly important reason that retailers want no wage rises is that consumers aren’t spending. 

According go the National Retail Association (#unhelpfulacronym: NRA, wants a 0% rise), “recent data from the Australian Bureau of Statistics (ABS) show that the sector suffered a 0.5 per cent fall (seasonally adjusted) during the traditionally busy month of December and the figures for January 2018 again highlighted poor sales growth.”

And the Australian Retailers Association (wants 1.9% i.e. CPI): “Retail as an industry is already struggling, with year-on-year revenue growth dropping significantly, partialy [sic] due to weak consumer confidence… When consumer confidence is low, retail trade suffers, and the absence of robust consumer confidence levels in recent times has been detrimental to the viability of the sector.”

And Master Grocers Australia (wants 1.1% rise): “The domestic retail sales market remains slow moving.”

At least the ARA doesn’t want workers to have a wage cut. You can only wonder at the mindset of the NRA and MGA, who think retail sales are going to magically surge off the back of further real wage cuts for low-income earners, who spend more of their income than anyone else. Maybe they think every other sector but themselves should be made to pay higher wages?

Meantime the government’s submission runs to over 80 pages without recommending any wage rise, which the cynical could interpret as a de facto recommendation for a 0% rise. To the government’s credit, however, at least the submission avoids the controversy of last year’s effort, in which the government argued a minimum wage rise would simply be wasted on women and young people. There is, however, the problem of trying to keep your story straight in different contexts. As part of its advocacy of a tax windfall for multinationals, the government insists we desperately need to boost investment, and a tax cut is the only way to do that. Only, its submission says

Business investment is forecast to grow by 2 per cent in 2017-18 and 3 per cent in 2018-19. This recovery follows four years of declining investment, where falling mining investment weighed on overall spending. Mining investment is expected to continue to fall over the forecast horizon as large resource projects are finalised, but the drag on economic growth is near complete. In contrast, non-mining business investment exceeded expectations in 2016-17 and is forecast to increase by 5 per cent in both 2017-18 and 2018-19. This ongoing improvement is consistent with more positive business conditions and surveyed non-mining capital expenditure intentions over the past year.

And all despite the apparent deterrent value of our company tax rate! Oh, and there’s this:

Business profits have increased by 5.0 per cent over the past year, with mining profits accounting for just under half of this growth on the back of resurgent commodity prices… Profits have also increased in the non-mining economy, up 3.8 per cent in 2017.

Remember Scott Morrison insisting wages growth would follow rising profits? So far, the only wages growth has been in government-controlled health and education. So… not so much.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey