The fallout from last week’s March quarter national accounts, which saw average compensation per employee contract in nominal terms for the first time in recorded history, continues.
According to The Australian Institute, the share of Australian gross domestic product (GDP) going into workers’ pockets has hit a record low. From The Canberra Times:
The Australia Institute analysis shows the 46.2 per cent share of GDP in the March quarter was the lowest recorded since the Australian Bureau of Statistics started collecting the data in 1959…
“Just 9.9 cents out of each dollar in new GDP created in Australia over the last year went into labour income,” [Jim Stanford, economist and director of the Australia Institute’s Centre for Future Work] said…
Dr Stanford said policies including stronger minimum wages and protection of penalty rates were needed to stimulate wage growth and reverse the decline in workers’ share of GDP.
“These findings indicate the need for a systematic effort by policy-makers to rebuild and modernise the institutions that regulate income distribution,” he said.
“There is no reason to believe any more … that economic growth alone will lift all boats and automatically trickle down into wages and salaries for working Australians.”
The Federal Labor Party believes that falling union membership is a key cause of this low wages growth, and wants to beef-up union membership and powers. From The Guardian:
The party’s deputy leader, Tanya Plibersek, says there is a clear link between declining union membership, the lowering of workers’ bargaining power, and today’s low wage growth, and the link between labour productivity and wages must be restored “at the very least”.
Her intervention in the low-wages debate follows a speech last month by Brendan O’Connor, Labor’s employment and workplace relations spokesman, in which he flagged Labor’s intention to make it harder for employers to terminate enterprise agreements…
He said Labor was looking at how to change the Fair Work Act “so that, rather than resorting to the nuclear option of terminating agreements when negotiations fail, the system works to assist the parties to come to a resolution, and to do so on a level playing field”.
His policy announcement came after he and the Labor leader Bill Shorten met the ACTU leadership and affiliated unions, and the labour movement pressed the case for legislative change on several fronts.
It reflected the mood in caucus in favour of beefing up the existing workplace relations framework.
AdvertisementPlibersek, in a speech to the Sydney Institute on Thursday evening, said workers’ wages growth could be revitalised if the bargaining power of workers and their unions could be strengthened.
Labor is fully justified to be concerned about this issue. The share of Total Factor Income going to workers has fallen to the lowest level in more than 50 years:
And over the past five years, real average compensation of employees has fallen despite a solid increase in labour productivity:
Still, one wonders why Labor continues to ignore the key driver of Australia’s recent poor wages growth: mass immigration. Australia’s permanent migrant intake has been maintained at turbo-charged levels – even higher than during the mining boom – despite the labour market and economy having significant spare capacity.
As long as the labour market continues to be flooded with 200,000 migrants per year (mostly ‘skilled’), there will continue to be an oversupply of labour, which will continue to reduce workers’ bargaining power and maintain downward pressure on wages.
In the meantime, housing affordability will remain under pressure, especially in the migrant hotspots of Sydney and Melbourne, thus eroding workers’ real purchasing power even further.
If the Labor Party genuinely cared about its working class base, it would stop ignoring the issue and announce policies to curb Australia’s mass immigration program and safeguard living standards by taking pressure of jobs, housing, infrastructure, and the environment.
