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E-book The Wages Crisis in Australia : What it is and what to do about it

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Penilaian

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Central bankers are supposed to be a rather dour lot. They are charged, after all, with maintaining the monetary and financial integrity of the whole economy. They cultivate a public reputation as prudent, cautious guardians of price stability — an independent, reliable force, ready to pounce at the first signs of economic overheating and inflationary pressure. They are the ones who come in to take away the punch bowl, just when the economic party is getting started.This deliberately joyless public image made it all the more surprising to see Australia’s central banker — Dr Philip Lowe, Governor of the Reserve Bank of Australia (RBA) — take up the cause of higher wages for Australian workers. In several interventions in 2017 and 2018, in the wake of five years of unprecedented deceleration in Australian wage growth, Dr Lowe highlighted the macroeconomic dangers of the ‘crisis... in real wage growth’,1 and explicitly advocated bigger wage increases. It’s as if, instead of taking the punch bowl away, the central banker was now pouring in extra spirits. ‘Some pick-up in wages growth would be a welcome development’, Dr Lowe suggested — certainly an unusual sentiment to be expressed by a central banker.2The RBA acknowledged that its own wage forecasts (along with those published by other major agencies, like Commonwealth budget projections) have erred epeatedly since 2011. They have consistently overestimated wage growth, and falsely predicted an always-imminent rebound in pay (rising back toward traditional annual increases of 4%), even as realised wage gains slid lower and lower.3Wage growth bottomed out at under 2% per year for private sector workers after 2015, and slightly higher for public sector workers, as described in detail in Chapter 2 of this volume. There is no sign yet of any significant rebound. But with wages growing so slowly, it is very difficult to maintain the RBA’s inflation target of 2.5% per year, Dr Lowe conceded. ‘A lift in wage growth is likely to be necessary for inflation to average around the midpoint of the 2-3% medium-term inflation target.’4 In fact, given normal productivity growth (of 1% or more per year), wage growth would have to reach 3.5% per year or more to be consistent with the inflation target.5 Dr Lowe encouraged workers to be more aggressive with their wage demands. He hypothesised that they have been unduly deterred from demanding higher pay by fears about their job security from forces like globalisation and automation (fears which he himself believes are mostly unfounded).6Lest any observers fear that Dr Lowe had suddenly taken on new responsibilities as a union organiser, he was quick to clarify that his interest in higher wages is mainly driven by his goal of meeting the RBA’s inflation target. His admittedly ‘controversial’ observations were designed to lift expectations about future wage gains, preventing currently low wage expectations from becoming ‘locked in’ to future wage trends.7 In that regard his comments are in fact consistent with the RBA’s mandate. His overarching priority, after all, is to keep inflation at a stable, supposedly optimal level — and he can’t do that if nominal wages and unit labour costs are growing too slowly. (Ironically, his advice was not heeded in the RBA’s salary negotiations with its own workforce. They were granted annual salary increases averaging just 2% in a new three-year enterprise agreement signed in 2017.8) But even when seen through the lens of his monetary policy goals, the RBA Governor’s blunt and surprising comments serve as a potent confirmation that the context for wage determination in Australia has been dramatically altered.

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Ketersediaan

Informasi Detail

Judul Seri

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No. Panggil

658.32 BOR t

Penerbit

Australia : University of Adelaide Press., 2018

Deskripsi Fisik

346 hlm

Bahasa

English

ISBN/ISSN

9781925261837

Klasifikasi

658.32

Tipe Isi

text

Tipe Media

computer

Tipe Pembawa

online resource

Edisi

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Subjek

Wage and Salary Administration

Info Detail Spesifik

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Pernyataan Tanggungjawab

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Versi lain/terkait

Lampiran Berkas

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