AUSTRALIA risked a return to the “wages explosions” of the 1970s and 80s, when thousands of workers lost their jobs, unless employers and unions took responsibility for the cost of their pay deals to the broader economy, the Abbott government has warned…
In a wide-ranging address on workplace relations to the Sydney Institute, Senator Abetz said he was disappointed when as shadow minister “weak-kneed” employers would cave into union demands but then approach him advocating workplace reform, effectively blaming the system for their shortcomings…
“Employers and unions must be encouraged to take responsibility for the cost of their deals, not just the cost to the affected enterprises but also the overall cost in relation to our economic efficiency and the creation of opportunities for others,” he said.
“If this is not done, then we risk seeing something akin to the ‘wages explosions’ of the pre-Accord era, when unsustainable wage growth simply pushed thousands of Australians out of work. If the system is not driving the parties to act more responsibly, then it needs to be reformed so that it does.”
His warning came despite the fact that nominal wage growth has been very weak on both the Australian Bureau of Statistics’ national accounts and wage price index measures.
A quick glance at the data shows that the Abetz’s claim of a potential “wages explosion” so far looks flimsy. According to labour economist, Matt Cowgill, the Wage Price Index is growing at its equal slowest pace ever:
Moreover, wage outcomes in collective agreements are at their lowest level since the late-1990s:
That said, as shown this morning by the RBA, Australian unit labour costs (ULCs) have outgrown most of our trading partners, with growth particularly strong in manufacturing (see below charts).
Accordingly, it is important that any further devaluation of the Australian dollar is not offset by rising wage claims, otherwise Australia’s non-mining economy will remain uncompetitive, leading to widespread job losses as the mining investment boom unwinds.
