skip to Main Content

Australian minimum wage case decision – a scandalous indictment of our system

On June 19, 2020, Australia’s wage setting tribunal, the Fair Work Commission handed down its – Decision: Annual wage review – which saw the National Minimum Wage (NMW) rise by just 1.75 per cent per cent from July 1, 2020. However some of the flow-on increases (awards linked to the NMW), which would normally have been adjusted on the same date have been staggered (November 1, 2020 for Group 2 Awards and February 1, 2021 for Group 3 Awards). The new minimum wage will be $753.80 per week or $19.49 per hour (a measly 35 cents per hour extra). In terms of any inflation measure you want to choose, the FWC’s decision represents a real wage cut for the lowest paid workers (Group 1) and even larger cuts for the other Groups as a result of the staggered wage rises. There is certainly no joy for workers when the mindless pursuit of austerity by the federal government slows growth (before the pandemic), which the government’s own wage setting tribunal then uses as a pretext (the slow growth) to cut real wages. Meanwhile the major employer groups argued for zero nominal rise while enjoying growth in profits with rising productivity growth. A scandalous indictment of our system.

Read More

Worst is over for Australian workers but a long tail of woe is likely due to policy failure

Today (June 16, 2020), the Australian Bureau of Statistics released their latest weekly employment data taken from Australian Tax Office data. They have slowed the release cycle on this data (for reasons they have not disclosed), so it is a month since I have analysed it. The latest edition came out today – Weekly Payroll Jobs and Wages in Australia, Week ending 30 May 2020 – which covers the new data from May 2, 2020 to May 30, 2020. The monthly labour force data to be released on Thursday covers a period that ends around May 12, 2020, so today’s data provides a more recent snapshot of the state of affairs. At the beginning of May, the data was suggesting that the worst of the job losses were over. The severity of the lockdown has eased a little since then, although the pattern of easing has been quite different across the states and territories. So we might have expected some variations to arise from that. And today’s data shows just that. In the Accommodation and food services sector, where some easing has occurred, jobs are returning, albeit at a slow rate. But in the Arts and recreation services sector, where little change in lockdown restrictions has occurred to date, there has been very little employment growth. The question is how many businesses will go to the wall before we get a more usual scale of operation and interaction. My prediction is that many will disappear and so the recovery in employment will be protracted given how many jobs have been lost to date. A much larger fiscal intervention is required and it has to be directed at workers rather than firms and support direct job creation. The problem now is that the Government is starting to reassert its neoliberal ideology and withdrawing the inadequate stimulus far too early. The future is not looking good. We might be virus free but there will be massive unemployment remaining into the distant future.

Read More

Neoliberalism is likely to survive yet another crisis

Last week, the results of a survey of Australian economists was released which showed that the majority supported freezing minimum wages, which normally are adjusted annually in June. The minimum wage case is currently being heard in the wage setting tribunal (Fair Work Commission) and a host of antagonists have assembled arguments to stop millions of the lowest paid workers getting a pay rise. In effect, they are advocating a real wage cut for these workers given inflation is running at around 1.8 per cent per annum at present. The Australian government is also claiming it will not extend the already inadequate fiscal support measures that have left more than a million low-paid, casual workers without any wage support since the lockdown began. And they have started winding back support in key sectors like child care which will impact disproportionately on low-paid women’s employment opportunities. But, some are still claiming that neoliberalism will not recover from this pandemic. That all the myths we have been fed about government fiscal policy capacity have been exposed for what they are and we will come out of this with a new economic paradigm. Not so fast. Not a lot will change yet. The struggle goes on.

Read More

Latest employment data for Australia exposes Federal government’s wilful neglect

I reported in this blog post – Policy failure – Australian unemployment rate probably already around 10.9 per cent (April, 2020) – that the The Australian Bureau of Statistics has started publishing weekly employment data on a two-week cycle. The data is drawn from a new series made available as a result of the Single Touch Payroll data provided by the Australian Tax Office and provides researchers like me with much more timely data than the monthly labour force survey. The latest edition came out today (May 5, 2020) – Weekly Payroll Jobs and Wages in Australia, Week ending 18 April 2020 – which covers the new data from April 4, 2020. The results are shocking. The conclusion from my analysis of the latest available data is that some sectors in the Australian labour market have experienced a sudden and catastrophic contraction – like nothing we have ever seen in the data. Both employment losses and major wage losses are underway and the policy response is totally inadequate for the task. A much larger fiscal intervention is required and it has to be directed at workers rather than firms and support direct job creation.

Read More

Policy failure – Australian unemployment rate probably already around 10.9 per cent

The Australian Bureau of Statistics has started publishing weekly employment data – Weekly Payroll Jobs and Wages in Australia, Week ending 4 April 2020 – which is drawn from a new series made available as a result of the Single Touch Payroll data provided by the Australian Tax Office. For the first time, researchers like me can have up to date information as the economy cycles. Usually we get the labour force data some 5-6 weeks behind time and although a lot doesn’t necessarily happen in a month, this crisis is the exception – the whole box-and-dice is collapsing so quickly that we need weekly data, like is provided in the US through the Department of Employment’s unemployment claimants data to stay in touch with how things are tracking. But for now I estimate that the unemployment rate rose to around 10.9 per cent in the 3 weeks to April 4, 2020 (up from 5.2 per cent for the March data – which was surveyed in the early part of the month). In that time, unemployment has more than doubled and is around 1.5 million and rising. The conclusion from my analysis of the latest available data (released April 21, 2020) – is that some sectors in the Australian labour market have experienced a sudden and catastrophic contraction – like nothing we have ever seen in the data. Both employment losses and major wage cuts are underway and the policy response is totally inadequate for the task. A much larger fiscal intervention is required and it has to be directed at workers rather than firms. I will say more about those issues next week. But I am guessing that the Government’s response so far is less than half of what it should have been – it needs at least another $A200 billion.

Read More

The government should pay the workers 100 per cent, not rely on wage subsidies

The buzz-word at the moment in Australian government and policy circles is ‘hibernation’ – the government is hoping, that the economy can behave like a crocodile and find some ‘river bank’ and have a ‘good sleep’ until the pandemic is over, at which time, it will burst forth into a new growth phase and unless the virus mutates into something worse in the meantime then all will be well. Their policy interventions to date – while they have been like dragging a chain as their conservative instincts are being dragged very quickly into the demands and realities of real world macroeconomics, which is different to the nonsense that is taught by mainstream economists in our now depleted universities – have been crafted to ensure nothing important changes in a structural sense in our socio-economic lives. The problem is that the existing system, which they are hoping to put into hibernation for a while, is putrid to the core and needs major changes if we are to achieve a socio-ecological transformation. Remember the failings of neoliberalism? Remember climate change? Remember the poles melting? Remember the engineered cuts to workers who rely on penalty rates at weekends to maintain a sense of material prosperity? Remember the 13.7 per cent labour underutilisation rate? Remember the failed public transport and energy sectors, privatised and lacking in investment? Remember the financial markets that were exposed by the recent Royal Commission as corrupt, inefficient and downright dangerous to the our material and psychological prosperity? We don’t need a hibernation. We need the Government to take advantage of the dislocation that is currently occurring to make some basic changes. Like wiping out the gig economy. Like … read on. At present, the stimulus interventions, which are mostly about saving capitalism from itself. We should be demanding much more.

Read More

Workers in half Australian industries endure real wage cuts

Last Wednesday (February 19, 2020), the Australian Bureau of Statistics (ABS) released the latest- Wage Price Index, Australia – (December-quarter 2019). Both private and public sector wages growth was just 0.5 per cent in the December-quarter – keeping growth at record lows. Over the year to December 2019, overall wages growth was 2.2 per cent. With the annual inflation rate running at 1.8 per cent, workers were able to enjoy some real wages growth. However, over the longer period, real wages growth is still running well behind the growth in GDP per hour (productivity), which has allowed profits to secure a substantially increased share of national income. Further, 9 of the 18 industrial sectors delivered real wage cuts to their workers and the aggregate figure is distorted by the strong growth in two sectors only. At the current rate, nominal wages will be lucky to top 2 per cent in 2019-20, which means the tax revenue estimates in the fiscal plans are likely to be over-stated. And, if the mainstream narrative was remotely correct, why is employment growth flat-lining when wages growth is at record lows?

Read More

Puzzle: Has real wages growth outstripped productivity growth or not? – Part 2

Inspector Commissionaire Bill is back on the case today for Part 2 and the solution of the puzzle we posed in – Puzzle: Has real wages growth outstripped productivity growth or not? – Part 1 (November 20, 2019). The puzzle was relatively easy to understand. The RBA (Australia’s central bank) published analysis in its most recent – Statement on Monetary Policy (November 2019), which showed that since the early 2000s, real earnings per hour have been above hourly labour productivity. Yet, National accounts data and earnings-productivity data trends that I regularly publish show the opposite. So the puzzle is: How can the RBA say that workers enjoyed real wage increases above labour productivity growth in the early 2000s up to around 2012, when we know the wage share has been falling more or less over the entire period? In Part 1, we laid out the conceptual framework to help us understand what I am writing about today. The resolution is that both sides of the puzzle are correct in their own way. The issue comes down to measurement and this two-part series demonstrates, very powerfully, how perceptions that are shaped by the presentation of data (graph, tables, etc) rarely come to grips with the underlying methods used to construct the presentations. We have all heard the phrase – There are three kinds of lies: lies, damned lies, and statistics. By becoming more educated about how to use statistics, we can all break that nexus and deploy data more reasonably to advance our cases. That is what this two-part blog series is about.

Read More

Puzzle: Has real wages growth outstripped productivity growth or not? – Part 1

I am currently working through the entire Commissaire Maigret detective series written by Belgian author author Georges Simenon. I read a lot as I travel around and I have 74 (out of 75) Maigret novels to read. But don’t let that fool you, I am already becoming familiar with Maigret’s forensic way of thinking (-:. So for the next two blog posts we will be conducting a forensic examination of data to solve a puzzle that appears to be confusing people. This is the sort of puzzle that people (like me), who are interested in data and have a penchant for spy and detective novels like to investigate. For others though, while the nuances might appear to be rather obscure, the importance of this sort of puzzle cannot be understated. Community perceptions are influenced by what I am talking about today. Policy decisions are taken. Industrial relations strategies are designed, implemented, and, in some cases, fought out with significant consequences. The data I am analysing today and tomorrow can provide information about the state of the economy. It can inform us of the way in which the economic is changing in structure over time. It can provide guidance to fiscal and monetary authorities as to the likely impact of policy changes. So, as you will see, ambiguity is not going to be very helpful. The data I am dealing with in this blog post explores the relationships between nominal wages, prices and productivity in the Australian economy. The principles established, though, apply to all economies. What I will show you is that the choice of how we choose to measure key variables can fundamentally alter the way we think and act. This is Part 1 of a two-part series. Now, if only I had a pipe to light! (Maigret joke for insiders).

Read More

Australia – wages growth continue at record low levels – further evidence of policy failure

Last Wednesday (November 13, 2019), the Australian Bureau of Statistics (ABS) released the latest- Wage Price Index, Australia – (September-quarter 2019). Both private and public sector wages growth was just 0.5 per cent in the September-quarter – keeping growth at record lows. Over the year to September 2019, overall wages growth was 2.2 per cent and in decline. With the annual inflation rate running at 1.7 per cent, workers were able to enjoy some real wages growth. However, over the longer period, real wages growth is still running well behind the growth in GDP per hour (productivity), which has allowed profits to secure a substantially increased share of national income. And, as the federal government continues to sabotage the economy as a consequence of its obsession with recording a fiscal surplus, the moderating wages growth will likely undermine it planning targets. In the last fiscal statement, the government was forecasting annual wages growth would be 2.75 per cent rising to 3.25 per cent. At the current rate, nominal wages will be lucky to top 2 per cent in 2019-20, which means the tax revenue estimates in the fiscal plans are likely to be over-stated. And, if the mainstream narrative was remotely correct, why is employment growth flatlining when wages growth is at record lows?

Read More
Back To Top