(Image: Mitchell Squire/Private Media)

What exactly is the government’s wages policy in the wake of the budget?

It’s claiming a damascene conversion to the need for wages growth and fiscal policies to achieve it, but it looks a lot more like Augustine’s “Lord make me pure, but not yet”.

If the budget forecasts are to be believed, the government is pumping extraordinary spending into the economy for what, over forward estimates, will be zero net real wages growth. They’ll fall this coming financial year, flatline from 2022 to 2024, and finally rise a small amount in 2025.

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In his Insiders appearance yesterday, Treasurer Josh Frydenberg tap-danced around the looming real wages cut, blaming one-off changes in government charges and other costs for the “temporary” fall.

But there’s been nothing temporary about real wage falls for many workers in major industries like construction for most of the past decade, when wages growth has barely managed 2%. And general wages growth is still not going to reach 3% by 2025.

Last week Frydenberg got some media spin happening around a suggestion the government was supporting a minimum-wage rise by the Fair Work Commission (FWC). Not by actually calling for a wage rise, of course, but by advising the commission — a body now generously stacked with Coalition fellow-travellers — of the budget forecasts.

But the letter says nothing to contradict the government’s initial submission to the FWC in April, which warned of higher labour costs being “a major constraint to small business recovery”, and discouraged pay rises for low-paid female workers, while urging the FWC to exercise “caution” in deciding on any pay rise.

Frydenberg yesterday also declined to support wages growth for the aged care workforce — despite that being the only way we’re going to achieve the growth necessary in that workforce to match demand from an ageing population, let alone the staff increases required by the government’s reform in the sector.

It’s a shame David Speers didn’t raise another, much less subtle government policy to suppress wages — its cap on public sector wages growth to private sector levels (while the budget papers warned that state public sector wage caps would hold down wages!).

It’s pretty simple: if the government is serious about higher wages growth, it has a number of tools to employ: it can recommend a decent minimum pay rise to the FWC; it can lift public sector wages; it can urge state governments like NSW to do the same; and it can fund higher wages in the sectors it controls financially, like aged care.

It is choosing to do none of these and Australian workers are suffering real wage falls this year and next as a result.

This week will see the Wage Price Index (WPI) result for the March quarter, which is expected to be a rise of about 0.5% quarter on quarter for an annual rate of 1.4%.

That will be followed on Thursday by the jobs data for April. They’re likely to show only a small impact from the ending of JobKeeper on March 28 (which will be a fantastic result). Watch the differing emphases the government will place on the two numbers. If it focuses only on the latter and ignores the former (as it has been doing for years), it’ll show the government gets that it should be trying to lift wages, but its heart will simply never be in it.

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Peter Fray
Peter Fray
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