Australian wages growth has finally staggered back to pre-pandemic levels, with yesterday’s seasonally adjusted Wage Price Index (WPI) showing a rise of 2.2% for the year and a 0.6% rise for the September quarter.
That means real wages fell by 0.8% in the year to September 30.
We know that, as the Reserve Bank (RBA) has pointed out so often, Australian employers are a huge problem when it comes to improving wages growth. There’s widespread resistance to paying decent wage rises, wage theft has been a core part of the business model of many industries, and some politically powerful sectors (like horticulture) profit off exploitation and abuse of workers.
The other massive impediment to wages growth is Scott Morrison. The data from the Bureau of Statistics showed private-sector wages rose 2.4% over the 12 months, with the public sector trailing behind at 1.7%, reflecting tight caps imposed on public service salaries.
NSW has ditched its public service pay freeze and public servants there will get 2.5%. The Andrews government has budgeted for a miserly 2% rise in Victoria. But the Morrison government has retained its policy to keep public sector wages to no more than private-sector growth — which until the September quarter has been below 2%. Will Morrison and his right-hand man Ben Morton now give public servants a 2.4% pay rise? Don’t count on it.
Meantime Australian Public Service managers are fighting a losing battle to recruit staff — especially given professional services saw the biggest wages growth over the last year, at 3.4%
And despite a broader fiscal policy to stimulate employment, the government is working hard in other areas to stifle wages growth. It uses its resources to enforce exploitation in horticulture, where conditions for Pacific Islander workers have more in common with the antebellum South than a 21st century economy. It is going full steam ahead on a new agriculture visa designed to enable farmers to access cheap, easily exploited labour from ASEAN countries. And Morrison is rushing to ensure hundreds of thousands of temporary migrants — on temporary worker visas, or foreign students — can return through reopened borders as quickly as possible to sate business demands for foreign labour.
This all directly counters the Reserve Bank’s laser-like focus on wages growth as the key input to a sustainable increase in inflation. The RBA wants to get monetary policy back to normal, and end our reliance on strong stimulus via minimum interest rates. But it’s a difficult challenge — remember, we had the strongest jobs boom in history from 2015 to 2019 and despite that, wage growth stagnated right up to the start of the pandemic. The RBA can’t do that if the federal government is merely paying lip service to the need for wages growth while, like business, doing everything it can to undermine it.
We’re back to the pre-pandemic tension between the RBA and the government. Last time it was over the need for more fiscal stimulus, which was never resolved until the pandemic. Now it’s over wages growth and the need for the Coalition to ignore the demands of its donors and actually support real wages growth.
If you want a decent pay rise, move to Tasmania, which has led the nation in WPI growth for the whole of 2021. The Tasmanian government did not impose a wages freeze on rank-and-file public sector employees during the pandemic, and public sector wages growth in that state has been consistently strong since 2019. And private sector wages growth in Tasmania hit 3% in the September quarter — the kind of territory the RBA wants to see.
Unfortunately it’s exactly the result Scott Morrison and his business mates don’t want.