More Resources on Australia's Wages Crisis

The debate over wages, prices, and living standards heated up even further this week, with the release of new ABS statistics showing continuing weakness in wages despite the acceleration of inflation. The latest data from the ABS Wage Price Index (WPI) shows nominal wages grew just 2.4% over the 12 months ending in March. That is less than half as fast as consumer prices grew (5.1%), producing the biggest decline in real wages this century.

Our Centre continues to develop resources documenting the dimensions and causes of declining real wages, and countering the claim that trying to protect real living standards (by boosting wages at least as fast as inflation) will somehow cause hyperinflation and economic ruin.

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Webinar: Changes to the SCHADS Award and Next Steps to Improve Job Quality in Human Services

The Fair Work Commission recently announced important changes to the SCHADS Award (which sets minimum standards for workers in home care, disability services, community agencies, and other vital services) as part of its award review process. This culminates several years of research and advocacy by unions representing workers in these sectors, aimed at improving job quality and stability in these vital but undervalued positions. The Centre for Future Work provided expert testimony to the Commission as part of its review.

We recently hosted a special webinar to discuss the Commission's changes, their significance, and what comes next in the struggle to improve and properly value work in human services.

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Inadequate Sick Pay Contributes to Too Many Australians Working With COVID

Almost one in five Australians (and a higher proportion of young workers) acknowledge working with potential COVID symptoms over the course of the pandemic, according to new opinion research published by the Centre for Future Work.

The research confirms the public health dangers of Australia’s existing patchwork system of sick leave and related entitlements.

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To really address housing affordability we need to think differently

The current election campaign has seen the two major parties put forward housing policies, both of which to varying degrees are aimed at the demand side of the equation. 

The problem is that for many decades, housing policies have overwhelmingly been geared toward increasing demand within the private-sector housing market. This has only served to pump prices and make it harder for first-home buyers to enter the market, and also increasing the age that people are buying their first home.

Policy Director, Greg Jericho, writes in a column for Guardian Australia, that we need to instead focus on the supply side - increasing the stock of housing - and we also need to be bold enough to look outside the typical private-sector model. 

The Australia Institutes' Nordic Policy Centre has proposed a number of measures that have been pursued in Norway, Sweden and Finland that show the solution to housing affordability is not about creating tax distortions that benefit homeowners or which serve only to transfer money from low-income people to the wealthy, but instead treats housing as a need rather than just a wealth-building asset. 

After decades of failure, the solution to housing affordability needs to be something other than more policies designed to lift housing prices. 

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Gig work undermines care quality and job security in the aged care sector

In 2021 the Royal Commission into Aged Care Quality and Safety recommended that gig work, independent contracting and other ‘indirect’ employment arrangements be restricted in the publicly-funded aged care sector.

The Royal Commission found that, to develop the ‘well led, skilled, career-based, stable and engaged workforce’ required to provide high quality aged care, service providers should be directly employing aged care workers as employees.

Rather than adopting this recommendation, the Federal Government referred the matter to a Productivity Commission inquiry.

The Centre for Future Work made a submission to the Productivity Commission's inquiry into Aged Care Employment, in which we argue there is ample evidence to show there are unacceptable risks and consequences for both care workers and people receiving care, where workers are engaged as independent contractors, including as gig workers.

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Real wages should rise - anything else means declining living standards

This week the election campaign has turned to discussion about the increase to the minimum wage, with suggestions that an increase either in line with the curent rate of inflation of 5.1% or marginally above it (such as the ACTU's proposal of a 5.5% increase) would bring about a return to 1970s style wage sprials.

Labour market policy director, Greg Jericho, in his column in Guardian Australia, however notes that wages should grow faster than inflation, and so long as real wages are not outpacing productivity growth then such rises are not exerting any inflationary pressure. He also shows that given the recent estimates for inflation by the Reserve Bank, a 5.1% increase would not be enough to prevent the minimum wage falling in real terms over the next financial year. 

The problem is not that wages have been fuelling inflation, but that for the past 20 years real wages have risen slower than productivity .

We need to change the debate from a reflex that assumes low wages is the ideal to realising that given workers are the economy they should be rewarded fairly for their efforts and improvements in productivity.

You cannot say the economy is healthy if real wages are falling, and most certainly not if the lowest paid in Australia are seeing their living standards decline. 

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Wages Crisis Will Continue Without Active Wage-Boosting Policies: Report

A comprehensive review of Australian wage trends indicates that wage growth is likely to remain stuck at historically weak levels despite the dramatic disruptions experienced by the Australian labour market through the COVID-19 pandemic. The report finds that targeted policies to deliberately lift wages are needed to break free of the low-wage trajectory that has become locked in over the past nine years.

The report, The Wages Crisis: Revisited, authored by three of Australia’s leading labour policy experts: Professor Andrew Stewart from Adelaide Law School, Dr Jim Stanford from the Centre for Future Work, and Associate Professor Tess Hardy from Melbourne Law School, updates analysis and recommendations from their 2018 edited book, The Wages Crisis in Australia.

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Meeting Skills Shortages in an Expanding ECEC Industry

This report from the Carmichael Centre argues that Early Childhood Education and Care (ECEC) services should be treated as a strategic industry of national importance – not just a ‘market’, and not just a ‘cost’ item on government budgets.

Building a stronger, more accessible, and high-quality ECEC system is not just a top-ranking social priority for several reasons:

  • The ECEC sector supports hundreds of thousands of jobs.
  • It directly creates billions of dollars of value-added in the Australian economy.
  • It generates further demand for other sectors – both upstream, in its own supply chain, and downstream in consumer goods and services industries that depend on the buying power of ECEC workers.
  • It facilitates work and production throughout the rest of Australia’s economy, by allowing parents to work – although that goal would be much better achieved if Australia had a more comprehensive, universal, and public ECEC system.
  • ECEC enhances the long-term potential of Australia’s economy, and all of society, by providing young children with high-quality education opportunities – that are proven to expand their lifetime learning, employment, and income outcomes, and enrich their families and communities.

Australia’s current market-based system for ECEC funding and service provision is incapable of meeting the needs of parents, families, and the broader economy. A drift to the market-based provision of ECEC services has undermined public provision in Australia and diminished the quality of service and the conditions under which it is delivered.

From this crisis-ridden starting point, the staff recruitment and retention challenge in ECEC will become much worse, if in fact Australia were to make a long-term commitment to expand ECEC provision to adequately meet the needs of working parents (and the entire economy).

Much public debate over the viability of expanded ECEC, putting Australia on a par with other leading industrial nations, has focused on the fiscal dimensions of that undertaking: how would we pay for it?

If Australia is going to expand its ECEC system in line with the needs of working parents and employers, increasing funding to the Nordic-level average for ECEC must be considered, and ramping up high-quality vocational education for ECEC workers must be an immediate and highest-order priority to meet the workforce needs of expanded ECEC coverage.

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Rate rises are going to cause a housing affordability crunch

For most of the past decade the talk about housing affordability has focussed on house prices. As fiscal policy director, Greg Jericho notes in his Guardian Australia column, falling interest rates since November 2010 have made paying off a mortgage less onerous than it otherwise would have given the soaring house prices.

But that is about to change. 

The signal that interest rates are going to rise by possibly 2.5% points over the next 18 months means that for new mortgage holders the cost of repaying a mortgage is going to be harder than ever before - harder even than when interest rates hit 17% in 1990.

It is a hit that will only exacerbate standard of living problems as wages will struggle to keep up with the rising cost of of holding a mortgage - especially given the belief that wage rises need to be contained below inflation rises continues in economic debate.

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High inflation means real wages have plummeted

The March CPI figures showing that inflation rose 5.1% over the past 12 months is not just the highest level since the introduction of the GST it also signals the biggest fall in real wages since then as well. 

Labour market policy director, Greg Jericho, notes in his column in Guardian Australia that even if wages have increased by 2.5% in the next release (up from 2.3% in the 12 months to December) real wages will have fallen 2.5% in the past 12 months.

That would mean real wages would be back at 2014 levels and barely above where they were when the LNP took office in September 2013.

Worse still for low-income earners, in the past 12 months the prices of non-discretionary items rose 6.6%. For those whose income goes more towards paying essential bills than does the average household, the pain of these price rises has been much higher. Their real wages have likely fallen by more than 3% in the past 12 months.

This is why any gloating about a recovery from the pandemic must be tempered to consider the reality of workers' lives. It is not enough to point to lower unemployment if real wages are falling faster than they ever have outside of the introduction of the GST - especially for lower income earners. 

That is not a recovery; that is a failure. 

With interest rate rises now very much on the way, without wage rises that account for inflation and properly reward for increases in productivity, workers standard of living is set to fall and see them back where they were nearly a decade ago

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