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Back to school for me …

For the foreseeable future I am spending the time I would normally use to write a blog post each Tuesday, studying the Japanese language. I will be taking up a position to work in Kyoto from October this year for some time and so I have to improve my language skills. So – 日本語を勉強している学校に戻ってきました.

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    This Post Has 6 Comments
    1. Hope you can make a big impact in Japan Bill.
      I am also looking forward to reading your next blog on the RBA’s cash rate increase. I am left pondering, have they jumped the gun by the mere sight of rising labour costs and change in momentum? Or are there legitimate concerns this could turn into a price-wage spiral like the 1970s?

      The labour market data seems to indicate we are back to the 2007 labour market peak conditions (ignoring the closed borders, which are now opening). But I suspect there are legitimate labour cost concerns from what I have seen/heard on the ground for months now, and it now seems to be showing up in the preliminary data. This is supported by past regressions looking at underemployment having the strongest correlation with inflation of all the labour market indicators, and we are now approaching the 2007 underemployment levels which is when inflation began to really pick up.

      In this sense I am left on the fence regarding this hike. It’s from a very low base so is a muchness, but maybe they could’ve held it off for a few more months rather than jumping the gun, going back to the forward looking approach. They might argue it’s not just forward looking but based on their evidence that is coming through now. I am just a bit surprised they didn’t wait for a clear indicator of sustained wages growth. Perhaps they are trying to spread the rate rises over a longer time frame and create signals/expectations rather than execute rapid rate rises once the data becomes well and truly sustained and concrete. More lagged, predictable, gradual rises are more preferable for financial stability than rapid rate hikes. It could also be that because wage growth momentum in Aus is so laggy with the EBAs etc., they are anticipating if they wait too long momentum will swing too far into an entrenched price spiral.

    2. @Jesse Hermans

      I think the RBA have jumped the gun in part because they hang onto the belief that the average worker is on equal footing with the capitalist when it comes to negotiating wage rises. Thus in their eyes, a tight labour market will invariably result in a 1970’s style wage-price spiral if not dampened with rising rates. They don’t appear to place much weight on the loss of workers industrial power as unions have been eviscerated and are now a pale shadow of their former selves and they have wondered out loud in recent years as to why wage growth remains stubbornly low when the answers are staring them in the face – when workers unions have been reduced to a rump representing only a small percentage of the labour force and their activities are heavily shackled by legislation, employers enjoy a monopsony and can effectively set the price of labour across a large portion of the labour market.

      I suspect that much of any recent wage gains will turn out to not have been workers “winning” pay rises widely across the labour market but rather, employers having finally resigned themselves to the fact that when the labour market is as tight as it is, they need to offer workers a little better if they are to attract the labour they require to run their enterprises. This would be categorically different from workers calling the shots – in one scenario workers would clearly be empowered and be driving the wage growth while in the other they are still essentially price takers, reliant on the fact that labour is currently in short supply and it is competition between employers for scarce labour rather than workers bargaining power per se that is the main factor.

      The RBA expects the shortage of labour to intensify – I’m not so sure. International borders have now re-opened and regardless of which mob wins the election, government will be keen to resume the flood of imported labour to compete with local workers that has been absent for the past 2 years. This is what the RBA seem intent on hiking into.

      The March quarter inflation is obviously already history. By some simpler measures – such as the Melbourne Institute’s monthly inflation gauge – inflation effectively stopped growing in April.

      I suspect we might see a re-run of 2009, where the RBA declared “crisis averted” and began swiftly hiking rates – only to have the economy begin to splutter and for them to be forced to slash all the way back down past the previous “emergency lows”.

      One thing seems certain at least – this will negatively impact on the poorest in society: those in low-paid, insecure work, the unemployed, pensioners without super etc. Whether it will have any effect on dampening inflation seems a lot less certain.

    3. I wish you much joy Bill. I remember having to learn a bit of German when I was already nearly 40. It was a challenge. But the real learning took place when I was living with them. How they do things are very different from what I am used being a Thai. But with patience and time passing, I came to appreciate their culture very much – the beauty of public and social courtesy, the meal, the eating habit and manner, the punctuality, practicality, and responsiveness attitude; the respect for one another, the fun and joyfulness, the team spirit, the energy they have, and so on.

      One thing that strikes me a lot is that they do not work long hour. It seems life is more than work to them. After a normal working hour day, I saw that it was filled with other unrelated activities – music, arts, nature, sports, meet and talk with other set of friends or people etc. I feel it is a very balance way of living.

      Thinking about it, how little they work compared to others that I know, and how they could create such an systematic/efficient economy is a puzzlement to me.

      I am pleased I had the chance and luck to go through those experiences,. And not only that, later on I had many chances to work in other cultures or with people from other cultures, I realize that we are not the same, yet sometimes we use our own mindset, beliefs and attitude to judge others.

      I realize that this does not work well for me. luckily, I came to understand that more one day through work interactions when I judged others why they are not so motivated to work well and compete better, as generally expected.

      I realize that we are different, it could be that person values human, kindness, friendship, being part of the group more than material things/successes all the time.

      There and then, I came to realize that, at the end of the day, each of us are human being.

      And if we meet and treat one another with that attitude first and before, the rest can be very happy, fulfilling, and even surprisingly very productive one.

    4. How exciting, Kyoto is so beautiful you’ll love it there. Man do i miss Japan. And i am going to miss your writing, hope you keep it up from there! Safe travels

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