Australia’s wages crisis — unpacked
In Australia, wages have been growing at the slowest pace since the end of WWII — what the hell happened?
The wages crisis is very much part on the national election debate. Wages are growing at half of the traditional pace and it seems like an anomaly.
Consumer prices are going up. Labour productivity is going up. Wages should be going up. But they aren’t.” — Jim Stanford
Follow the Money is the Australia Institute’s podcast demystifying the big economic issues and putting them in plain English. In the latest episode, director Jim Stanford and economist Troy Henderson from The Centre for Future Work at The Australia Institute unpack why Australia has a wages crisis and why we have to fix it.
“It’s not just unions who care about the wages crisis,” says Jim Stanford, “For anyone concerned about the economic and social well being of the whole country, the wages crisis should be at the top of their agenda.
“Even someone like Phillip Lowe, the Governor of the Reserve Bank, he’s there to take away the punch bowl whenever the party gets fun and he is saying ‘hey, wages are growing too slowly, it’s slowing down consumer spending, it’s making it impossible for us as the RBA to achieve our inflation target” — Jim Stanford
Research from the Centre for Future Work uncovered the fact the share of the national income (GDP) going towards workers has been dropping compared to the share going to company profits. This leads to all sorts of problems for the economy and increases inequality.
And a new report from the Centre for Future Work puts a number on the total loss of wages, thanks to cuts to penalty rates, that will be experienced by workers in the retail and hospitality sectors through the Easter/ANZAC day holiday period: $80 million this year, rising to $107 million for a similar period once the rate cuts are fully implemented.
“The hypocrisy of the government to cry crocodile tears about slow wage growth while actively helping to keep wages down, that hypocrisy is incredible,” says Jim.
Aside from talking about average wages not increasing in real terms there have also been calls to lift Australia’s minimum wage which is currently set at eighteen dollars and ninety three cents an hour.
Last year the Fair Work Commission increased the national minimum wage by 3.5 percent from hour to help Australia’s 2.2 million lowest paid workers. And now the debate has shifted to the need for a living wage.
“One way is to look at the cost of living people face, see what you need in order to live a decent, dignified life in Australia today and use that as the basis for a living wage” — Troy Henderson