Flat wages and booming house prices cause housing affordability to plunge

Since the stimulus measures introduced in 2020 to prop up the housing market during the pandemic, house prices have exploded. In 2021 property prices across Australia's capital cities rose an astonishing 24%. Combined with the stagnant wages growth of the past 8 years, housing affordability has fallen dramatically. 

A decade ago the medium-priced house in Sydney was equivalent to 5.8 times the annual income of a median household; now it is 10.8 times that income. 

Greg Jericho examines the issue in his column in Guardian Australia and drills down to look at the affordability of housing across the nation and finds a shocking, yet unsurprising tale - and one that deserves a much greater focus in the coming election campaign than is currently the case 

https://www.datawrapper.de/_/GmaeJ/

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Sustainable Energy Critical to Australia's Aluminium Future

New research from the Centre for Future Work shows that the rapid transformation of Australia's aluminium facilities to sustainable sources of electricity would spark substantial economic benefits: for the aluminium industry, its supply chain, and for the burgeoning renewable energy sector (which would achieve greater critical mass from major new power supply contracts).

The report, by Jim Stanford (the Centre's Director) and Alia Armistead, looks in detail at the Tomago aluminium smelter in the Hunter region of NSW. It is Australia's largest smelter, and is currently powered through electricity mostly sourced from coal-fired generation. The facility has pledged to move to renewable power sources by 2030 -- and the new report confirms that this would underpin long-term industrial and economic benefits felt in all parts of the country.

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Record number of people working multiple jobs reveals the problems for workers

The latest Labour Account figures from the Bureau of Statistics reveal that at the end of last year a record percent of people were working more than one job.

The Centre for Future Work's Greg Jericho has analysed the figures and found an abnormally large number of new jobs since the pandemic have been in secondary jobs.

In the December quarter of 2021 a record 6.4% of employees were working multiple jobs

This unfortunately is not a pandemic-led one-off but part of a now 6-7 year trend that finds workers who are facing fewer hours, more insecure work, and getting pay rises that barely keep up with the cost of living being forced to seek another job to pay the bills. 

See Greg's full commentary in The Guardian: "Rise in hours worked signals post-lockdown recovery, but more people have multiple jobs than ever"


Australia's Lopsided Economic Recovery

While the headline news of 3.4% GDP growth in the December quarter of 2021 might suggest the economy is bouncing back, Greg Jericho, Policy Director for the Centre for Future Work, has found that the national accounts reveal just how badly workers are missing out.

In the last three months of last year, households in NSW, Victoria and the ACT came out of lockdowns and spent money propelling almost all of the economy growth in the economy.

But while households are providing all the growth, workers are missing out on the rewards. The share of GDP going to employees hit a record low in 2021 and as government stimulus begins to be withdrawn the picture is not as optimistic as the (erratic) quarterly growth figures might suggest.

Please see Greg's full commentary in The Guardian: "Don’t get too excited by Australia’s rebounding economy – it’s a distorted snapshot of the true picture."


International Collective Bargaining Experts Explore Future System Reform

Multiple negative economic and social consequences have emerged across Anglophone industrial countries from the retrenchment of collective bargaining systems, including slowing wages growth, rising insecure work, inequality, and declining productivity and growth - bringing urgency to proposals for collective bargaining reform.

On 10 February, Centre for Future Work hosted an exciting timely panel discussion between international collective bargaining experts titled “Beyond the Enterprise: Building Sectoral Collective Bargaining Systems in the Anglophone World”. The panel, delivered for the Association of Industrial Relations Academics of Australia and New Zealand (AIRAANZ) 2022 Conference, explored proposals across Australia, New Zealand, Britain and the US for widening bargaining scope to the multi-employer, industry-wide, or occupational level. Panelists and their presentation links are below:

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Loss of Bargaining Power Explains Wage Stagnation

The latest wages data from the Bureau of Statistics shows that in 2021 real wages plummeted, with inflation raising by 3.5%, while wages increased just 2.3%.

Our Policy Director Greg Jericho writes in Guardian Australia that claims of a “wages breakout” remain purely a scare campaign from employer groups determined to keep wages low. He finds that once again real wages are failing to keep pace with productivity and that as a result no pressure on inflation is coming from wage claims, but instead workers are missing out. With levels of unemployment now associated with much lower wage growth than in the past, it is clear the power imbalance in wage negotiations has shifted drastically away from workers.


Interest Rates and the Federal Election

For the first time in a decade the coming election will be at a time of increasing inflation and talk of rising interest rate. And while it is clear interest rates are always a political hot potato, Greg Jericho writes in his latest Guardian Australia column that we should not lose sight of the need for government support.

Inflation is occurring off the back of the largest government intervention and the lowest interest rates in post-WWII history. But while the economy is performing better than might have been expected when the pandemic first occurred it would be a mistake now to quickly reduce economic support from the public sector.

After the global financial crisis, worries about debt and deficit took precedence over the strength of the economy. At a time when government borrowing rates still remain historically low, the need to improve productivity through infrastructure and support in areas such as education and health, as well as equality improvements through high a higher Jobseeker rate, should take precedence in the upcoming federal budget.


Digging Deeper Into Australia's Unemployment Rate

Australia's unemployment rate is poised to hit its lowest level in a half-century, and this has been heralded by the current government as an economic triumph. But the unemployment rate depends on many factors (including labour supply, hours of work, and others), and does not by itself assure that the economy is maximising its potential.

In his weekly column for The Guardian Australia, Centre for Future Work Policy Director Greg Jericho unpacks the numbers behind the current unemployment rate, and compares it to the situation in 1974 when unemployment was last below 4%.

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Power, Not Just Supply and Demand, Vital to Future Wage Growth

Australia's unemployment rate declined to 4.2% in December, and it could fall further (below 4%) in the coming year, barring further waves of COVID or other global shocks. This has some forecasters predicting a quick acceleration in wage growth -- which has been stuck for almost a decade now at the slowest pace in Australia's postwar history.

Will a low unemployment rate be sufficient to solve the crisis in Australian wages? In this article published in The Conversation, Centre for Future Work Director Jim Stanford argues that the historic restructuring of Australia's labour market institutions over the last half-century (since the last time unemployment was below 4%) will continue to undermine wages, despite apparently tight labour markets.

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Australia's Once-In-A-Lifetime Opportunity to Rebuild its Vehicle Manufacturing Industry

A new report from the Centre for Future Work's Carmichael CentreRebuilding Vehicle Manufacture in Australia: Industrial Opportunities in an Electrified Future details how the global transition to EV manufacturing is an enormous opportunity for Australia to rebuild its vehicle manufacturing industry. The report, written by Laurie Carmichael Distinguished Research Fellow, Dr Mark Dean, details how an EV-driven industrial future contains significant opportunities to take advantage of our competitive strengths in renewable energy, extractive industries, manufacturing capabilities and skilled workers.

Australia possesses many of the crucial elements for an EV manufacturing industry:

  • Rich mineral reserves,
  • An advanced industrial base,
  • A highly skilled workforce, and
  • Consumer interest.

The benefits of an EV manufacturing industry would be significant for our economy, society, and environment, and include:

  • Tens of thousands of good-quality manufacturing jobs.
  • Stimulus for further development of a high-technology supply chain.
  • Opportunity to utilise Australian mineral resources (including lithium and other rare earths) in value-added industries, thus expanding their value many times over.
  • Diversifying Australia’s export profile and reducing our dependence on raw resource extraction and export.
  • Complementing and reinforcing our accelerating transition toward non-polluting energy sources and systems.
  • Spurring enhanced innovation, research, and engineering activity in Australia – still recovering from the closure of mass vehicle manufacturing in the mid-2010s.
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