July 1 marked the implementation of the next stage of reduced penalty rates in the retail and hospitality industries in Australia. It is now two full years since the first reductions were imposed for Sunday and holiday work in several segments of retail and hospitality. Once fully phased in, these reductions will reduce wage payments in the two broad industries by an estimated $1.25 billion per year -- at a time when concerns over weak wages and their impacts on the Australian economy are growing.
Employers argued before the Fair Work Commission that if their Sunday and holiday labour costs were reduced, they would hire more workers, and the Commission cited this logic in accepting employer demands for lower penalties. Now, with two full years of experience since the first reductions, there is growing evidence that the penalty rate reductions have not spurred job creation in retail and hospitality. To the contrary, our new report shows that employment growth in retail and hospitality has been far slower than in other parts of the economy (where penalty rates remained constant) -- and job-growth in the two sectors actually slowed by more than half after penalty rates began to fall.Read more
Australia’s economy continues to endure historically slow growth in wages and salaries, that is undermining household incomes, consumer spending, and economic growth. The Commonwealth government continues to predict an imminent rebound in wages – like in its most recent budget, where it yet again forecast wage growth accelerating quickly to 3.5% per year. But is the government willing to actually do anything to support wages?
The Centre for Future Work has released new research showing that just 3 specific actions by the Commonwealth government would lead to a significant rise in national wage growth, adding over $10 billion per year to aggregate wage income within three years. That doesn’t single-handedly solve the whole wages crisis, but it would be a big improvement.Read more
International evidence is clear that there is a strong, positive correlation between a country’s protection of labour freedoms, and the organising success and economic influence of unions. Improvements in basic labour rights and freedoms tend to be associated with increases in union membership (as a share of total employment). And stronger union membership, in turn, is associated with broader collective bargaining coverage, less poverty among working people, and less inequality.
Australia has a poor record of protecting basic worker and labour rights and freedoms: including rights to assembly, rights to organise, rights to due process, and rights to strike. According to the World Economic Forum (a generally business-friendly international policy organisation), Australia ranks 5th last among OECD countries in protecting worker rights.
A new study from the Centre for Future Work documents the correlation between workers' rights and union organising - and shows they are two sides of the same coin. And that correlation between workers' rights and the success of unions suggests that unions in Australia will need to continue their campaign to "Change the Rules" of Australia's labour market (including improving basic rights for workers to organise, bargain collectively, and take industrial action). Winning better legal and regulatory protections for workers seems essential to workers' ability to build stable, influential unions, and use those unions to improve their lives.Read more
Centre for Future Work Economist Alison Pennington recently gave a keynote address to hundreds of delegates at the ATIA International Taxi Conference, held this year in Gold Coast, QLD.
Her presentation discussed the historical, economic, and moral context for the rise of "gig-economy" businesses, such as Uber. She reviewed Uber's business model, and the company's recent IPO, in detail, arguing that it depends on underpayment of its drivers -- who for all practical purposes are "employees," even if current labour laws do not always explicitly recognise them as such.
Growing competition, regulatory and legal problems, and growing resistance to the ultra-precarious and low-wage incomes offered in this type of work suggest that the future success of digital platform businesses like Uber is very much in doubt.
Pennington also referenced findings of our previous paper estimating the net incomes of Uber-X drivers in 6 Australian cities.
Please view Alison Pennington's full presentation here.
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.Read more
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
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
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
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
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