Australia’s low wage growth is by design

Over the weekend, ABC business reporter, Gareth Hutchens, published an article suggesting that “stagnant wages” and “labour market ‘slack'” are part of the “federal government’s plan”.

Hutchens sites the collapse in wage growth over the past decade or so:

Australian wage growth

Collapsing wage growth over the past decade.

He then notes that the mass immigration policy pursued by the federal government meant that despite solid jobs growth, overall labour market underutilisation rose because there were more workers arriving every year via immigration than there were jobs being created:

Well, what the government hasn’t made explicit is that many of those jobs were going to imported labour.

That’s why that job creation wasn’t helping to tighten the labour market and generate wage pressures.

On the contrary, it was preventing the unemployment rate from falling below 5 per cent.

Coincidently, Treasury and Reserve Bank officials have been using an unemployment rate of 5 per cent as a deliberate policy tool in recent years to suppress wages and inflation growth.

So the government has been working in tandem with them.

But significantly, those same officials have recently admitted that the economy could have handled a lower level of unemployment over the five years to 2020, somewhere between 4.5 per cent and 5 per cent.

Of course, Hutchens could also have pointed to the Australian Treasury’s own research that the overwhelming majority of Australia’s jobs growth went to migrants between the 2011 and 2016 Census’, thus keeping unemployment elevated:

Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.

Migrants stealing jobs

Migrants took most jobs between 2011 and 2016.

Big Australia advocate, Professor Peter McDonald, released similar findings when he too analysed the 2016 Census:

The permanent and temporary skilled migration policies established by the Australian Government from 1995 played an important role in meeting that labour demand…

From July 2011 to July 2016, employment in Australia increased by 738,800. Immigrants accounted for 613,400 of the total increase…

Now the Morrison Government is seeking to suppress wages further by adding to the labour market’s spare capacity. It recently uncapped the number of hours that international students can work, alongside creating a new type of foreign worker visa – the subclass 408 (temporary activity) visa – enabling so-called temporary visa holders working in ‘critical’ sectors like hospitality to extend their stay by up to 12 months.

The Morrison Government has also flagged that it wants to give Australian businesses easier access to foreign workers by:

  • Abolishing labour market testing requirements.
  • Lowering costs and speeding up approval times for importing foreign workers.
  • Expanding the skilled occupation list to include almost any role.
  • Providing all ‘skilled’ visa holders with a clear pathway for transition to permanent residency.
  • Granting ‘skilled’ visa holders priority access to flights and hotel quarantine ahead of stranded Australians.

If pre-COVID levels of migration are restored, an extra 180,000 to 200,000 workers would join the Australian labour market every year, putting upward pressure on unemployment and placing downward pressure on wages. This, in turn, would make Treasury’s and the RBA’s new 4.5% unemployment target an impossible goal.

Australians experienced a decade-plus of crushed wages and living standards on the back of extreme immigration. This failed policy must not be allowed to return.

It’s time for Labor to take a stand. The Coalition’s proposed reforms are immigration’s equivalent of Work Choices 2.0 – designed specifically to neuter Australian workers and fatten company profits. So why is Labor remaining dead silent on this issue?

Unconventional Economist
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Comments

    • drsmithyMEMBER

      Labor’s solution to the wages problem is ‘join a Union’.

      This is one of the reasons they struggle to find support in the ~85% of the population that isn’t unionised.

      • Unions certainly have their place – but they’re certainly not for everyone, even if that’s just a personal choice (even if, perhaps, they should be in a union).

        Rightly or wrongly, unions also have an image problem.

        As you know, there’s more to bettering wages than unionism – other factors need to be addressed, too, and unionism is probably not the right vehicle for it all.

    • Treacherous Labor won’t do anything to lower the net mass immigration into Australia, because when the immigrant composition is nudging 90% ‘brown man’ , it fits with treacherous Labor Party ideology of a socially engineered multiracial society.
      This is a core Labor ideology … there will be no discussion especially when the Coalition are being the useful idiots for them by foisting the mass immigration we have to because of their neoliberal ideology and to a get desired GDP result.
      Alas, when Labor gets elected one day, the Coalition will say little because it fits their neoliberal ideology.

      An unholy alliance of the progressives ideology and neoliberal ideology.

  1. pfh007.comMEMBER

    Low wage growth is part of an LNP plan?

    Hold the front page!

    It has been a bi-partisan plan for almost 40 years.

    The LNP just give it a red hot go.

  2. The Drum on ABC a couple of nights ago was a shocker! All the usual BS about how who have to have a very high stream of immigration because of skills shortages, when really it’s wage shortages. Rizvi was by far the mist sensible commentator!

  3. Lord DudleyMEMBER

    Labor are super pro big Australia levels of immigration because they see any policy to run the immigration tap at a lower rate than the LNP as racialist.

    As for 200k new workers per year… pfft. After the October Scotty Government electoral landslide, you recalcitrants will be forced to take your medicine, and not only will the immigration floodgates be opened, but they’ll be opened even more to catch up for lost time. That’s if Scotty is listening to his mates, and I’m pretty sure he is.

    This expectation that Australians are developing of higher wages is a threat to future profits. It must be mercilessly crushed. Bump NOM up to 400k for two years at least. That’ll crush any wages driven cost push inflation.

    • Lord DudleyMEMBER

      Nup. They’re a reflection of the electorate. They came from Australian families, Australian homes, Australian schools, Australian churches, Australian businesses, Australian universities, and they were elected by Australian citizens. This is the best you can do. This is what you have to offer. This is what your system produces. Garbage in, garbage out. If you have selfish, ignorant citizens, you’re gonna get selfish, ignorant leaders.

      Maybe it’s not the politicians who suck. Maybe something else sucks around here… like… the public. Yeah, the public sucks. There’s a nice campaign slogan for somebody… “The public sucks, f✓©k hope”.

      • fitzroyMEMBER

        You’re too hard on us. You assume that the LNP doesn’t work for the big end of town and that the ALP doesn’t work for self loathing white woke feminazi marxists. The two main political parties do not represent the electorate.

      • As well as all that, they’re also, hungry, horny, convicted, duplicitous, preditory, cunning, sly, corrupt, morose, fat, intent, right (as in know best). I know this because that’s just about everyone too.

        Whenever I see anyone wanting me to vote for them, I think the above first, then it doesn’t matter what they’re about, I just can’t vote for anyone. Yes I agree, the parliament (of wh0res), is our reflection.

      • The House or Representatives of which Labor and Liberal dominate are not representative of the electorate. The Senate more reflects the electorate. Labor’s share of primary vote is less than 33% and rapidly falling. The LNP is around 40%. That is why we have quite a diverse senate.

  4. Labor already took a stand on mass migration. When Keneally broke ranks in 2020, her own side quickly showed her the “racist” card. They’re simply waiting for the 17m voters to come round to the correct United Nations position.

  5. Hmmm… can’t remember voting for lower wage growth and increased competition from those used to developing country lifestyle and cost base? Must be one of those things that are for our ‘own good’, done to us not for us?

    Yes, how odd that there is no party or way to vote against these policies as they have been institutionalized and the opposition party denuded of any persons carrying this position to improve Australian well being. Noam Chomsky is a bit of smart a**e after all.

  6. C'est de la folieMEMBER

    When it comes to labour conditions (including incomes) in Australia everyone seems to have forgotten that following on from WW2 and all the way through to the 1980s there was some serious regulation of labour and a very significant labour inspection at federal and state level all around the country.

    Real inspectors who could say to businesses we want to see

    Payslips – this is why they were compulsory under the old IR acts
    Tax deductions for employees

    Then on top of that add in an Industrial Relation Commission which could and would make a call about what is a contractor and what is an employee.

    Note the below guidance…from the Fairwork Commission (and you know that when a government commission has the word ‘fair’ in the title then it wont remotely be concerned about fairness of anything and will be all about creating the perception of ‘fair’ while shelling out 300 grand for life jobs to party hacks.

    https://www.fwc.gov.au/general-protections-benchbook/sham-arrangements-division-6

    So taking that as basic guidance how many employees in Australia -notably in State and Commonwealth public services and other public funded employers – are somehow labelled ‘contractors’ through sham contracting arrangements.

    One can take or leave Unions – some are good and some arent – but without a vigorous workplace union presence (and they have been given a belting for a couple of generations now) then the absence of workplace inspectorates and a generations worth of sham contracting starting in the public sectors is the place to start when it comes to looking at Australian incomes growth.

    • Lord DudleyMEMBER

      All that sounds like the administrative state. Australians don’t want that. They want what Steve Bannon referred to as “deconstruction of the administrative state”. What that actually means is no audit trails, no accountability, lax/selective enforcement, and might makes right. Basically fascism.

      But you don’t call it fascism. You tell people that you’re cutting red tape and getting the bureaucrats’ noses out of everyone’s businesses, while making it very clear to businesses that they don’t need to keep records, and laws won’t be enforced anyhow so long as they keep favor of the government.

      Of course, after a while both businesses and government start operating this way, and ignoring laws that they simply don’t like. Selective enforcement is then used to go after the oligarch’s enemies.

      This is the road to fascism, and it’s being done purposefully. As people like Bannon have shown, they’ve been thinking about this for decades, and they have a plan.

      It’ll most likely work in Australia.

      • Well the goal is certainly is a corporatist economic state – but for the benefit of who? – the large financial organisations – (as who pay the bonuses to the execs and the dividends to the wealthy retired and fund the multi property owners ) -so in Australias case it is the property owners and the ponzi funding banks!

      • ^^^ This ^^^
        LD, well commented. Just about everyone I know, thinks that fascism is what they see in movies, or WWII documentaries about Italy under Mussolini, Germany under Nazis. That is, an overt dictatorship by the state, where the streets are monitored and patrolled by the police, and military, citizens can be detained and questioned for nothing, political prisons, information suppression, etc.

        Rather, they’ll look at the world around them, and exclaim things like, the left wing socialists, the communist state, the socialist-communist such and such person or party., for what’s (perceivably) going wrong around them, or to them. You’ll have bugger all hope of explaining to them, dictatorships can occur in capitalism, or welfare is just as much a fascist thing, as it is anything left wing.

        No one seems to look at the state-corporate nexus, and ownership structure (and favour) within such a nexus. As you have stated, this is the road to fascism, and it’s heavily propagandised, so the state won’t rely on the batton so much. Though I think the state will swing the batton about just a little more often than before.

  7. There is an element of truth in this. Both sides of government from 2007 onwards have generally ignored persistent internal reporting of widespread fraud in the onshore and offshore migration skilled and student programs.

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