Economy

May 17, 2018

Wage stagnation is a major failing of our governing class

Policymakers, refusing to accept that their wage growth thinking is deeply flawed, serve nothing but the interests of profitable corporations.

Bernard Keane and Glenn Dyer

Politics editor / Crikey business and media commentator

The forecasts tell a sad story. According to Scott Morrison back in 2016, we should currently be enjoying wages growth of 2.75% -- pathetically low by the standards of the recent years. A year later, he downgraded that to 2.5%. And last December, nearly half way through 2017-18, he dropped that to 2.25%.

With just one quarter to go, we're currently on 2.1%. And private sector workers can only dream of 2.25% -- they're on 1.9%. Many working in big industries like construction are seeing shrinking real wages despite our low inflation rate. The Reserve Bank is suggesting 2% might be the new speed limit for wages growth.

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8 comments

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8 thoughts on “Wage stagnation is a major failing of our governing class

  1. TraceyR

    There’s an elephant in the room – it’s called immigration.
    Australia is importing workers at record numbers, 190,000 last year.
    No one wants to mention it because of fear of being associated with Pauline Hanson, but if big business can import cheaper workers from overseas, no one is getting a pay-rise.

    1. Wayne Cusick

      And unemployment isn’t coming down.

  2. old greybearded one

    It is not a failing, it is a bloody policy Bernard. It has been perfectly achieved.

  3. Ian Mannix

    It is possible to look reasonably at this from a different direction and get an optimistic result: Low wages growth is a triumph of the well informed and well-meaning political class which has now secured low unemployment; low wages growth; low inflation; low interest rates (even with record debt). I would argue there might well be unanimity that these are all better than the alternatives – remember unemployment stuck on 10%; youth unemployment of 30+ percent; interest rates of 18 % and interminable industrial strife? The economy is growing and transitioning to services and exports; it is modernising (albeit slowly) and the Gonski and NDIS reforms are proof that the community will pay higher taxes for the vulnerable. We can do better, sure, especially around the environment and our foreign affairs, but maybe we will achieve more if we accept that we have come a long way, and ask: “what will improve this?” rather than “how did it come to this?”

    1. Woopwoop

      Some are better, some are worse.
      Low wages growth is obviously bad news for workers.
      Low interest rates are bad for oldies who depend on interest, better for borrowers. And it’s arguable that low interest rates are partly what pushes housing out of reach for first home buyers.
      Low unemployment? Sure, it’s been higher, but you’d expect it would be lower with jobs growth. In fact, immigration creates more jobs but hasn’t helped unemployment.

  4. kyle Hargraves

    Guys, Just WHAT is original in your (collective) article of today that hasn’t been hammered to death over the last six months? A few of the more informed contributions or a link to the previous submissions would be helpful. In fact I am more than a little annoyed at the concluding paragraph given the rather extensive correspondence in regard to this topic.

    “Here’s a prediction: wage stagnation will continue.” : duh!

    “Corporations will enjoy healthy profits while forcing workers to endure real wages cuts and zero growth”
    : duh!

    ” But it will keep on feeding into the deep-seated disenchantment that voters feel about an economic system that works for the wealthy and corporations, not them”

    naive optimism at best (or worst)

    “And that will keep driving what business laments as the ill-advised “populism” of the electorate and politicians that exploit it.”

    Now, THAT stablemen almost makes the grade!

    Lastly, TraceyR, you are not the first to identify “excessive” immigration as a contributing factor but given the relative percentage of immigrants (NOT all of whom are in search of work – the ABS data refers) to the Australian labour force the matter of immigration is NOT a factor. Research contained in the Crikey archives exists.

  5. AR

    During the Howard interregnum, 1996-2007, over 2M immigrants, an unknown and unascertainable number on 450-460 (as were) visas took up residence in this country.
    In the last ten years, during governments of, allegedly different hues, almost 2M more came to reside, permanently.
    Plus the exploding (now) 457 & student visa rorts which cannot be calculated without interrogation of divers data bases with serious MOUs precluding the consolidation and export of data.
    About a quarter of our current population and without the electorate being asked.

  6. Vasco

    It’s not immigration, it’s not unions, it’s not dole bludgers; it’s capitalism enacted by a bunch of mediocre neoliberal ideologues.

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