Is the Coalition the party of low wage growth?

The Guardian’s Greg Jericho has posted an article claiming that the Liberal’s economic agenda is built around “lower taxes for companies and the wealthy, and lower wages for everyone else”.

Jericho’s thinking goes like this:

  1. The Morrison Government has refused to lift JobSeeker to a subsistence level;
  2. It has introduced a new hotline for employers to dob in unemployed people that refuse to take a low-paying job;
  3. Such policies seek to keep wages low and come at a time when chronically low wage growth is a feature of the Australian economic system.

Jericho’s thinking is broadly correct. However, I would also add the Government’s JobMaker policy into the mix, which explicitly subsidises employers to replace older high-wage full-time workers with younger, lower paid part-time workers. In turn, JobMaker will also act to suppress wages while subsidising business profits.

The question is, would a Labor Government help to restore wage growth? It’s hard to say.

We can safely assume Labor would take a different approach to industrial relations, which would be more favourable to workers and wages.

However, Labor is also wedded to lifting the superannuation guarantee to 12%, which would unambiguously lower take-home wage growth by forcing workers to direct more of their pay into superannuation accounts than disposable income.

Labor’s position on immigration is also contradictory. On the one hand, it has made positive utterances about lowering temporary migration, which would reduce competition in the labour market, increase worker bargaining power, and help support wages. On the other, Labor has continuously backed a bigger permanent migrant intake, as well as vigorously opposed commonsense policies like stronger English-language proficiency, the latter of which (i.e. stronger English-language proficiency) is correlated directly with higher wage growth. Labor has also been conspicuously silent on lifting JobSeeker.

The upshot is that wage growth will stay in the gutter as long as the Coalition Government remains in control. Its policy settings are explicitly designed to subsidise profits, to suppress worker bargaining power, and to keep businesses well stocked with abundant cheap labour.

However, wage growth will also likely remain weak under a Labour Government. While its industrial relations settings would undoubtedly be better for workers, lifting the superannuation guarantee to 12% would likely garnish any gains.

In summary, Australian workers are stuck between a rock and a hard place with little genuine political representation from either side.

The Coalition is wedded like always to its business mates, while “Labor” is more concerned with pandering to inner-city progressives than its traditional working class base.

Unconventional Economist


  1. Is the Coalition the party of low wage growth?

    Lol. Are bears catholic? Does the pope sh1t in the woods? 😁

    To argue that they aren’t in favour of low wage growth would deny the observable reality that they’ve been in power for 8 years of low wage growth and suggest that they have no control at all over such matters.

  2. MathiasMEMBER

    I think whats embarrassing is how Australias Democracy is crumbling at its greatest hour in need.

    There needs to be a power that comes from within Parliament. Im not sure what it is but something needs to arise or Australias going to be in a lot of trouble.

  3. Maybe, but what evidence is that the ALP are any different?
    Can you think of a ALP government that gave us decent wage growth?