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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Of 3’s, and Other Important Labour Market Numbers

Will an unemployment rate with a 3 in front it, ensure that we also get wage growth with a 3 in front of it? Don’t count on it.

Prime Minister Scott Morrison set tongues wagging this week with a confident pledge that Australia’s unemployment rate could have “a 3 in front of it” this year. It’s a theme that will loom large in his campaign for reelection later this year.

In this commentary, Centre for Future Work Director Jim Stanford considers whether a low unemployment rate is an accurate indicator of the state of the labour market -- and whether, even if achieved, it would reignite wage growth and solve other problems holding back Australia's labour market.

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CPI Numbers Don't Tell the Whole Story

With the rise in inflation as Australia's economy struggles with re-opening and supply chain problems, each release of the Consumer Price Index (CPI) generates headlines and political debate. But the CPI doesn't necessarily provide a full reading of price pressures: depending on who you are, and what you buy. In this column published in the Guardian Australia,  Greg Jericho (new policy director for the Centre for Future Work) dissects several measurement issues related to this most-watched economic statistic.

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Snatching Defeat from the Jaws of Victory: Labour Market Implications of Australia's Failed COVID Strategy

As COVID and recession gripped the world, through 2020 and most of 2021 Australia recorded one of the best outcomes: lower infection, fewer deaths, and a faster, stronger economic recovery. That seeming victory has been squandered, however by the appalling and infuriating events of recent weeks. Purportedly in the name of 'protecting the economy', key political leaders (led by the Commonwealth and NSW governments) threw the doors open to the virus at exactly the wrong time: just as the super-infectious Omicron variant was taking hold.

The resulting surge in infections has been among the worst in the industrialised world (worse than the U.S. now, as shown in the following graph from Our World in Data). The implications of this massive outbreak for work, workers, production, and the economy have been as predictable as they are devastating. One-third or more of workers in the most-affected regions cannot attend work: because they contracted COVID, were exposed to it, or must care for others (like children barred from child care and soon, possibly, schools).

Our Centre for Future Work team has been active in highlighting the risks of 'letting it rip', analysing the failures of isolation and income support programs, and reminding everyone that keeping workers healthy must be the first priority in keeping the economy healthy. Here is a selection of our recent interventions:

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What Next for Casual Work? Professor Andrew Stewart webinar recording

Casual employment has dominated Australia’s labour market recovery from COVID-19. And the right of employers to hire staff on a casual basis in almost any role they choose – including jobs that on their face appear have permanent characteristics – seems to have been cemented by recent amendments to the Fair Work Act, and by the High Court’s recent ruling in the WorkPac v. Rossato case.

What do these new developments mean for the further spread of casual and precarious work? What are the other implications of the High Court ruling for future employer strategies? And what options remain for limiting the spread of casual and insecure work? To examine these matters and their implications, we were recently joined by renowned labour law expert Professor Andrew Stewart from the University of Adelaide.

Andrew's highly informative presentation can be viewed below:


Fair Pay Agreements: How Workers in NZ Are Getting Their Share

Across the ditch, the Ardern government in New Zealand is undertaking an ambitious and multi-dimensional effort to address low wages, inequality, and poor job quality. NZ unions have just won the introduction of Fair Pay Agreements, planned for implementation in 2022. FPAs will allow working people to bargain collectively across sectors and start to correct the income and power imbalance between workers and employers.

The Centre for Future Work hosted a special webinar with Craig Renney, Economist & Director of Policy for the New Zealand Council of Trade Unions. In the recorded webinar, Craig explains key FPA policy details including design & coverage of the system, and how FPAs can lift wages and labour standards, stop the ‘race to the bottom’, and rebuild worker bargaining power in NZ. The webinar is the first in the Centre's exciting new webinar series exploring key labour market topics related to work, wages, and fairness. Hosted by our Senior Economist Alison Pennington.

 

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