Another week, another major economic speech, this time by the prime minister. Last week’s by Treasurer Josh Frydenberg was helpfully drowned out with the parachuting of Warren Mundine into Gilmore.
As is the infinitely annoying way of modern Australian speechmaking, Morrison’s speech will receive more coverage before its delivery than after; actually bothering to assess speeches in detail appears to be an art lost to modern journalism.
What we do know, or at least are told, is that Morrison will say “only half of those of voting age will have experienced a recession during their working lives”, an idea oft repeated by economic reform advocates on all sides, with the suggestion that a feckless electorate will “take the economy for granted” and lose its commitment to more reform. It’s not too far from the idea, occasionally proffered by business types, that what Australians needs is a bloody good recession to teach them to accept more reform (AKA company tax cuts and industrial relations deregulation).
While we wait for Morrison’s speech, let’s play a fun game. Instead of asking how old you were when there was last a recession (me: 24!), how about how old were you when you last had a decent pay rise?
What’s a decent pay rise? We’re not talking about huge real wage increases — just something modest that leaves a bit left over after inflation. Say, an extra percentage point increase above inflation every year.
Based on the Australian Bureau of Statistics’ Wage Price Index data for private sector workers, if you work in construction — an industry where the militant CFMMEU holds sway and gentle bosses cower in fear from bikie thugs demanding more money — you last had a decent pay rise in 2012, when wages rose 4.1% and inflation was only 1.2%, though you came close in 2013 when wages grew 0.9% more than inflation. It’s been slim pickings since, though — over the five years to June 2018, construction wages rose a total of 0.9% more than inflation. More militancy required, evidently.
Things are brighter in another big employing sector, retail — you had a 1.4% increase above inflation in 2016, when inflation slumped. Unfortunately, that only partly makes up for the fact that in four of the years since 2011, retail workers have had wages growth at or below inflation.
In manufacturing, things have been better — a 1.4% rise in 2016 and a 1.2% rise in 2015. But in transport, things have been grim: there was a 1% above inflation rise in 2016, but overall since 2011 wages growth was lower than inflation in four years. In the professional services sector — where the large number of contractors means additional downward pressure on wages — there hasn’t been a decent pay rise since 2013 (1% above inflation) but since then real wages have shrunk 1%.
Miners (a sector where we’re continually told by big mining and resources companies of the terrible wage costs they face) haven’t had a decent pay rise since 2013 either, and real wages have fallen 0.6% since then. In rental and real estate, the last pay rise above 1% was 2012. Ditto in administrative and support services. Educators in the private sector got a 1.2% rise above inflation in 2016; like health, which has seen the strongest wages growth of recent years among both public and private employers, wages have risen ahead of inflation every year.
Frydenberg barely mentioned wages in his speech last week. Perhaps Morrison will take the opportunity today to announce a policy to address wages stagnation. But don’t count on it.