Real Wage Cuts Hit Marginal Electorates Hard

New analysis of income tax data confirms a dramatic slowdown in Australian wages in recent years – and the slowdown is worse than previous statistics indicated.

The research is contained in a new report from the Centre for Future Work at the Australia Institute.  It shows that average nominal wages in Australia grew just 1.7% per year between 2012-13 (when the wage slowdown took hold) and 2016-17 (most recent tax data available). That's below the average national rate of inflation over that period (1.9%), resulting in a decline in the average real wage.

While the wage slowdown was experienced across the country, some regions were particularly hard-hit. Real wage losses were especially large in Queensland and Western Australia. Moreover, the impact was disproportionate in regional communities in both states -- located in some of the most fiercely contested electorates in the current federal election campaign. This suggests that public anger over falling real wages could be politically pivotal to the result on May 18.

View the full report here.

Read more

The Impact of Minimum Wages on Recent Wage Trends

Tomorrow the Australian Bureau of Statistics will release its quarterly Wage Price Index: the most commonly-reported measure of wage growth in Australia’s labour market. Given the importance of public debates about wages and wage policy in the current federal election campaign, this release is timely and politically important.

This briefing note reviews some methodological issues related to the WPI. It also considers recent data confirming the visible impact on the WPI of last year’s strong increase in the national minimum wage.

Read more

Penalty Rate Cuts Will Exact Big Toll Over Easter/ANZAC Day Period

Many Australians are eagerly anticipating a unique concentration of public holidays in coming days. There is a ten-day period (stretching from Good Friday through Sunday, 28 April) during which many employees only have to work three days. Many Australians are now arranging to take those three days off: creating an extended 10-day holiday for the “price” of just three days leave.

Of course, many other Australians will be required to work during this period, and so for them the appeal of this coming period is diminished. Adding insult to injury, however, is the fact that their compensation for working during this period is being significantly reduced as a result on ongoing reductions in penalty rates for Sunday and public holiday work in the retail, accommodation, and food and beverage industries. A new report from the Centre for Future Work puts a number on the total loss of wages that will be experienced by workers in the broad retail and hospitality sectors through the coming holiday period: $80 million this year, rising to $107 million for a similar period once the rate cuts are fully implemented.

Read more

Tax Cuts Can't Compensate for Flat Wages

This week's pre-election Commonwealth budget will feature reductions in personal income taxes, as the Coalition government tries to overcome a disadvantage in the polls in the coming federal election. Public debate in recent weeks has been focused on the economic and social hardship caused by the unprecedented slowdown since 2013 in Australian wage growth. It is likely that the government will portray its personal tax cuts as a form of "compensation" for slower wage growth.

But new analysis from the Centre for Future Work shows it is mathematically impossible for personal income tax cuts to offset the loss in family incomes resulting from years of wage stagnation. The report simulates the effects of ongoing regular wage increases on household incomes, compared to the "savings" of personal income tax cuts. Regular, compounding wage increases provide boosts in disposable income dozens of times larger than tax cuts. Moreover, tax cuts always come with a "cost" for households - in the form of foregone public services and income supports that also contribute to workers' standard of living.

Read more

Labour Reforms in New Zealand, and Lessons for Australia

Australia can learn much from the policy leadership of the Ardern Government in New Zealand and its reforms to address stagnant wages and rebuild a more inclusive workplace relations framework, according to new research from the Centre for Future Work at the Australia Institute.

As Australia's debate over wages and workplace rights heats up ahead of this year's federal election, important changes in labour policy are also being implemented right across the Tasman Sea. Under the Labour-Green-NZ First coalition government which came to office in New Zealand in 2017, several progressive changes in labour law have already been enacted. Others are in development.

Economist Alison Pennington reviews the policy reforms underway in New Zealand, and considers their relevance for Australia, in a new paper published by the Centre for Future Work.

Read more

Economy Heads Into Election on a Weak Note

The ABS has released what is likely the last quarterly GDP report before a Commonwealth election expected in May. Coalition leaders were hoping a strong report would underline their standard talking points about being the best “economic managers.”  But they were badly disappointed.

The headline number was bad: Just a 0.18% increase in GDP for the December quarter, barely above zero. But the details, if anything, were worse.

Our Director Jim Stanford parses the numbers in this briefing note.

Read more

Submission to Victoria Inquiry into On-Demand Work

What's a 'gig' job, anyway? There's lots of media hype about how people won't have jobs in the future (they're so old-fashioned). Instead they'll work a never-ending series of gigs. Will they love the supposed 'freedom' and 'flexibility'? Or will they yearn for the good old days when a job provided regular hours ... and a regular paycheque?

The government of Victoria is holding an important inquiry into the conditions and challenges of working in the 'on-demand' economy: a polite euphemism for gigs. The Centre for Future Work has made a submission.

Read more

What's a Million, Anyway?

In the lead-up to the 2013 federal election, then-Opposition Leader Tony Abbott made a high-profile pledge that a Coalition government, if elected, would create 1 million new jobs over the next five years. Abbott was elected (although later ousted by his own party), and total employment in Australia did indeed grow by over 1 million positions between 2013 and 2018.  Current Prime Minister Scott Morrison hopes that this success can resuscitate his party's flagging fortunes: he has pledged, if elected, to create even more jobs (1.25 million) over the next five years.

But a new report from the Centre for Future Work takes a closer look at the government's claims, and finds that Australia's job-creation record since 2013 has actually been unimpressive.

Australia's working age population is over 20 million, and growing rapidly.  The labour market must create well over 1 million new jobs every five years, just to keep up with population growth.  Moreover, it was only due to a surge in part-time jobs (most of them casual, low-wage positions) that Mr. Abbott's million-job target was met.  If full-time work had retained its previous share of all work, the number of new jobs would have fallen well below the 1 million benchmark.

Read more

On the Brink: The Crisis in Private Sector Collective Bargaining

Australia’s enterprise bargaining system is crumbling rapidly in private sector workplaces, according to dramatic findings from the Centre for Future Work.

The report shows that the number of current enterprise agreements in private Australian businesses has collapsed by 46% since the end of 2013.  The number of private sector workers covered by enterprise agreements has plunged 34% in the same time. In 2017, just 12% of employed private sector workers were covered by an enterprise agreement – down from 19% in 2013.

If current trends in renewals, new agreements, and terminations continue, less than 1700 agreements would survive to 2030, at which point just 2% of private sector workers would be covered by a collective agreement.

Read more

Private Sector Wage Growth Still in Doldrums

New data on private-sector business conditions confirm that wage increases paid in the private sector of Australia’s economy continue to plumb record lows.

The ABS’s quarterly Business Indicators report, released yesterday, indicates total wages and salaries paid out by private businesses grew 4.3 percent in the September quarter, compared to year-earlier levels. This only slightly exceeded the increase in total private sector employment during the same period. As a result, wages and salaries paid per employed worker grew very slowly – by just 0.43 percent over the year.

Read more


ACNC_Registered_Charity_Logo

get updates