Families change but the same problems remain

The latest data from the Bureau of Statistics on families shows that more than ever before couples with dependants are both working. 

Labour market policy director, Greg Jericho, notes in his Guardian Australia column that over the past 40 years the make-up of families has shifted dramatically from ones with just one parent working to now more than 70% having both partners in employment.

While this has mostly come from the great gains made by women since the 1970s that have seen changes to discrimination laws, child care and also societal norms to allow women to participate in paid work even once they have had children, it also highlights the rising cost of living pressures faced by most families. 

The times when a family on one income could be expected to buy a house are long gone. But the decade of weak wage growth and recent falls in real wages make living on one wage even more difficult. 

But the data reveals that men are still more likely to be the sole breadwinner and it confirms the labour force data that shows women remain much less likely than men to work full-time. This is a major reason why women in over 90% of occupations earn on average less than do men. It means that women remain at a heightened risk of income loss in the event of relationship breakdowns that can severely affect their standard of living, especially in retirement. 

The data also reveals that women remain very much the most likely parent in sole-parent families. Given the laws that now see such parents move from the parenting allowance to the lower-paying Jobseeker once their youngest child turns 8, this highlights the precarious nature over 800,000 women face as they attempt to survive as the sole parent. 

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Webinar on Wages, Prices, and Power

The Australian Council of Trade Unions is sponsoring a series of webinars for union members, delegates, officials, and leaders on the current crisis in the cost of living in Australia. The surge in inflation since economic re-opening after COVID lockdowns has obviously intensified that crisis. But the seeds for it were planted long ago: by a decade of historically weak wage growth, a speculative property price bubble, and a systematic efforts to weaken collective bargaining and unionisation.

Jim Stanford (Economist and Director) and Greg Jericho (Policy Director, Labour Market and Fiscal) from the Centre for Future Work are providing keynote presentations as part of this series. Below is a recording of the first of these presentations, presented by Jim.

Webinar Opening Slide

 

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With a global recession looming the cure of inflation looks to be worse than the disease

This week the IMF released its latest World Economic Outlook. And the outlook is dire. Economic growth around the world was downgraded with recession-like conditions being predicted for many advanced economies including the USA, UK and much of the EU. 

As policy director, Greg Jericho, notes in his Guardian Australia column, the outlook is not much better for Australia. The IMF is now predicting that in 2023 and 2024 Australia's GDP will grow less than 2%. Such meagre growth in the past has been consistent with periods of recession.

The report should serve as a stark warning to central banks around the world that their efforts to limit inflation by sharply raising interest rates is becoming more and more likely to end with a recession and the resultant massive loss of jobs that will follow. Experience from the 1980s and 1990s where similar recessions followed extreme tightening of monetary policy suggests it can take a long time to reverse the damage. 

While the Reserve Bank is somewhat constrained because it needs to be mindful of the rate rises in the USA that weaken the value of the Australian dollar, the IMF report should cause them to weigh much more the costs of sharply slowing growth through interest rate rises. 

We know that current efforts to limit inflation growth are mostly involving workers taking a real wage hit. Having to endure rising unemployment and a recession after 2 years of already extreme falls in living standards would be disastrous, especially while profits continue to rise. 

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Yesterday's Tomorrow Today - a new podcast from the Carmichael Centre at the Centre for Future Work

The Centre for Future Work and the Carmichael Centre are pleased to announce the launch of a new podcast project titled Yesterday’s Tomorrow Today, presented by the Laurie Carmichael Distinguished Research Fellow at the Carmichael Centre, Dr Mark Dean, and comedian and ecology researcher, Duncan Turner.

Laurie Carmichael believed that a worker-centred agenda for technological change was important to achieving better outcomes for society, with workers and their unions playing a pivotal role in shaping technology and skills for social progress.

The films reviewed in Yesterday's Tomorrow Today often depict the opposite of a worker-led future of technological change. It’s the aim of the podcast to break down what this looks like, and to suggest what an alternative future - one that benefits workers and humanity - might look like.

Listeners of YTT can expect podcast episodes to feature accessible political-economic analysis laced with good humour, reflections on accurate (and not-so-accurate) predictions of a future shaped by the neoliberal surveillance state, and a rotating list of special guests, including Dr Jim Stanford, Lily Raynes (Anne Kantor Fellow at the Centre for Future Work), Matt Grudnoff (Senior Economist at The Australia Institute) and more to come.

Don’t forget to like and subscribe to Yesterday’s Tomorrow Today wherever you get your podcasts and be sure to leave a review – this is what helps other listeners to find and subscribe to YTT, making sure we can keep reaching working people far and wide.

You can find the first episode - a review of 1987’s RoboCop - and what it warned us about deindustrialisation, gentrification, privatisation and police militarisation, here (also available on Apple Podcasts & Google Podcasts).


The UK shows how bad the Stage 3 tax cuts will be

This week the UK government introduced massive high-income tax cuts - cuts that are not even as bad as the Stage 3 tax cuts here in Australia. And the reaction by the market was brutal. Investors saw the tax cuts for what they were - a redistribution of national income from the poorest to the wealthiest, that provided no economic growth. As a result the value of the UK Pound plunged.

Fiscal Policy Director, Greg Jericho, notes in his Guardian Australia column that there are big lessons for Australia. 

The Stage 3 tax cuts are a case of terrible economics masquerading as a growth strategy. Trickledown economics does not work, never has, and this week we have discovered that even the markets agree. 

Rather than destroy your tax base, governments need to care about sustaining a broad revenue base that works to reduce inequality and fund services and investments that drives productivity and helps those who most need it. 

Trickledown economics has never worked and was always just fraudulent spin designed to hide its real aim of giving rich and powerful people tax cuts at the expense of others.

This week has shown that no one even believes the lie anymore. 


Work in the Care Economy Vital for Future Well-Being

There is growing understanding that care work -- including jobs in aged care, disability services, early child education and care, and others -- is of growing importance to future employment and wage trends, as well as to the quality of life of Australians who depend on these social and community services. For too long, jobs in these growing sectors have been devalued. Government underfunding and weak labour and quality standards have reinforced the degradation of work in care sectors. But with intense labour shortages, public concern about inadequate quality, and the need to expand services to meet social needs, there is now more widespread recognition that care jobs must be improved, and quickly: with more funding, better training, limits on private delivery, multi-employer bargaining, and more.

Our Policy Director for Industrial and Social issues, Dr Fiona Macdonald, recently discussed these issues in a feature conversation with Richard Aedy on the ABC RN program, The Money. They discussed the size of the care workforce, the challenges faced by care providers and participants alike, and the need for government reform. Hear the full interview here:

The Money

 


They didn't cause the inflation, but workers are expected to cure it

Last week before the House Economics Committee, the Governor of the Reserve Bank made it clear that the current rise in inflation has nothing to do with wages growth. And yet he also made it clear he expects workers to bear the brunt of the cost that comes from slowing inflation.

In his Guardian column, Policy Director Greg Jericho notes that given real wages have already fallen for 2 straight years any further falls will take workers' purchasing power backwards to where it was more than a decade ago. This however is viewed as being "worse than the alternative" of inflation growth above 3%. 

He notes that over the past 2 years the profit margins of many industries, and most especially the mining industry, have risen and have themselves fuelled inflation. But company profits are never expected to suffer, wages however are always viewed as either the culprit of inflation or the means to reduce it. The vast increase in mining profits, largely due to the Russian invasion of Ukraine, also highlights the urgent need for a windfall profits tax. 

Using the RBA's own estimates Jericho calcuates that by the end of next year real wages will be back at 2008 levels and even with the most optimistic outlook they will not return to 2019 levels until 2030. 

The Reserve Bank's strategy of sharply increasing interest rates risk slowing the economy into a recession even though real wages are already falling faster and for longer than they have in modern times. 

 

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Better Work and Care? We need better care systems, secure work, and policies for worker-carers

Our submission to the Senate Select Committee on Work and Care addresses three areas for urgent reforms.

Changes to formal care systems must increase access and affordability, reduce reliance on markets and private provision, and address the poor quality of jobs in care sectors. These reforms are also essential investments in our children’s futures, in better care for our elders and in more opportunities for people with disability.

Insecure work undermines our care systems and undermines workers’ ability to combine work and care. Industrial relations changes to make work more secure must increase working time security to support adequate hours, predictable schedules and increased control over working time.

Working carers require rights to adequate paid parental leave, annual leave, personal and carers’ leave, and effective rights to request flexible work. Policies that support shared care within families, households and the community are especially important for supporting women’s workforce participation.

See our full submission here.


The latest data shows just how bad housing affordability is

Since the Reserve Bank began raising interest rates in May, the housing market has very much come off the boil. 

But while the latest data from the ABS shows prices fell on average 2% across the nation in the June quarter, policy director Greg Jericho notes in his Guardian column that price remains well above what they were prior the pandemic. 

During the GFC the majority of the stimulus measures directed towards construction were on public works - most notably the Building the Education Revolution. During the pandemic, however, the Morrison government targeted the housing market with its HomeBuilder program in conjunction with the Reserve Bank's cutting interest rates. These served to set fire to the market as prices soared and affordability plummeted. 

In June 2020, the average dwelling price in Australia was $689,400. That was around 13.4 times the average annual household disposable income of $51,487. Now the average household disposable income is up to $56,129, while the average dwelling price is now some 16.4 times that at $921,500.

Even worse, ten years ago the average dwelling price was just 11.4 times. 

Housing policy has for too long been driven by keeping prices rising, and combined with flat income growth, it has seen a generation of Australians left out of the housing market. 

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The GDP figures show the ongoing shift of the national income to profits

The June quarter GDP figures released by the Bureau of Statistics showed that over the past year the economy grew a seemingly strong 3.6%. 

But as labour market and fiscal policy director Greg Jericho notes in the Guardian Australia column, beneath those good numbers are a lot of problems, not the least of which is that wages continue to fail to keep up with inflation. Over the past year the total compensation of employees rose 7% but inflation in the national accounts rose 8.3%. Over the same period corporate profits went up 25%. We are at the absurd state of affairs where GDP is rising strongly, but real wages are not. 

We now have a situation where a record low share of national income is going to employees and a record high share is going to profits. 

The talk is always about lifting productivity and wages will follow, but the story for far too long now has really been productivity rising and profits following. 

 

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