Wages growth in Australia continues to be in serious trouble. The official narrative is that wages are slowly picking up. In fact, workers in most industries saw wages growth fall in the March quarter — and often fall substantially.
Manufacturing is still a major employer of Australians — over 800,000 people make a living in that industry. But wages growth in manufacturing fell from 0.4% in the December quarter to 0.3% in the March quarter; annual growth in the year to March was a measly 2%.
Retail — where nearly 1.3 million Australians work — was even worse: from 0.5% in the December quarter to just 0.2% in March, taking annual growth down to 1.9%. Construction — over one million workers, and allegedly riven by the greedy demands of the CFMMEU — similarly saw growth fall from 0.5% to 0.2%. Annual growth was 1.8% — meaning construction workers didn’t get a real pay rise during the year, which doesn’t say much for the much-vaunted “militancy” of the CFMMEU. ICT and media, financial and insurance services, real estate, the massive professional services sector, public administration and arts and rec services all saw slowdowns in growth in the first quarter of 2019.
“Wages are starting to pick up,” Treasurer Josh Frydenberg insisted in March. He was wrong then and he’s even more wrong now. It’s even worse in the private sector, where wages growth accelerated in just five of 18 industries in the March quarter. It’ll be quite an impressive achievement if the government comes even close to its budget forecast of 2.5% wages growth target for this financial year — a forecast it has already downgraded since last year’s budget and three times since 2016.
No one — politically or in Treasury — is ever held to account for such blatant peddling of bullshit.
Perhaps that’s because the Reserve Bank has been in on the giggle. It endorsed the pollyannaish stupidity of wages growth slowly building momentum, dutifully claiming in each Statement of Monetary Policy for the last two years that wages growth would gradually pick up. The “pick up” ended up being a mighty 0.3 percentage points before grinding to a halt. Last May, the bank again declared that “wages growth is expected to pick up gradually, as spare capacity in the labour market declines and as any effects of structural factors that are weighing on wages growth start to dissipate.”
Problem was, the WPI then immediately stalled at 2.3%, and has been stuck there ever since. At least since late 2018 the bank’s forecasts have been creeping downward: last week’s SMP forecasts didn’t see WPI growth reaching 2.6% until mid-2021. By then, workers in some of our biggest industries will be approaching their ninth year of minimal wages growth and we’ll be within sight of a decade since wages grew at more than 3%.
This is a colossal failure by Australia’s governing class. Economists, business groups, commentators and politicians complain about rising populism and the lack of voter enthusiasm for yet more “economic reform”, while steadfastly ignoring that household income growth has been savaged. The Coalition has pursued a deliberate policy of wage stagnation that has crunched household income, driven down our national savings rate and undermined economic growth.
Business — similar in its stance to climate change action — says it supports higher wages growth but hysterically clutches its collective pearls at anything that might actually deliver that. The Fair Work Commission helped with its ideological, spiteful, attack on penalty rates which even business now admits led to none of the promised extra jobs. Treasury and the Reserve Bank supported the official cover story, that growth was just around the corner. And the media played along, especially the anti-worker Financial Review, the editor of which, Michael Stutchbury, has attacked people complaining about weak wages growth as “whingers”.
Hilariously, Stutchbury and co today demanded readers back the Coalition because “the coalition at least grasps that Australia needs a growth policy in order to lift incomes and sustainably pay for the services government provides”. That “growth policy” has delivered six years of stagnation that has left many workers with falling real incomes, and promises three more years of the same. Based on the evidence, the only incomes the government and the Financial Review appear to be interested in are those of shareholders.