Where’s the national backlash against Telstra’s price gouging?

The media is chock full with business groups slamming the 5.2% rise in the minimum wage, delivered on Wednesday by the Fair Work Commission (FWC).

Headlining the whinge is business lobby rent-seeker in-chief Innes Willox:

“Those on the minimum wage represent only 1.6 per cent of the total workforce. Those on the award rates, the lowest award rates, represent about 23 per cent of the workforce.”

“And then it flows up, it becomes the standard in negotiations, it becomes the standard expectation.

“It has consequences right through workforces, and that is probably the deeper concern for the business community”…

“[Businesses] have to make decisions around passing these costs on, so in the end it ends up with consumers who will pay the bill”.

“The concern is this will add fuel to the inflation fire we’re seeing running through the economy at the moment.”

Sky News has featured a cafe owner breaking down on live TV over the decision:

“While we accept the increase in the minimum wage obviously for our team and others to keep up with cost of living pressures, we as a business cannot afford it”…

“At the end of the day, it’s a business. We’re ere to make money. Our profit margin every day gets smaller and smaller and I really questions why? At the end of the day if there’s nothing to take home ourselves, then why?”

Business lobby puppet Robert Gottliebsen also warned of an inflation crisis arising from the decision:

The Fair Work regulator and the new Prime Minister have created a nationwide expectation of a 5 per cent wage rise which will act as a flamethrower to inflation…

There are loads more examples, but you get the gist.

Here’s a serious question for those attacking FWC’s decision to give Australia’s lowest paid workers an inflation-equaling pay rise. Why weren’t they up in arms over Telstra’s decision last month to hike its mobile phone rates by the inflation rate?

Telstra this week announced its monthly mobile costs would jump by $3 to $4 from July 1…

The telco giant said new and existing customers would be impacted by the change, which was justified as moving “in line with the Consumer Price Index”.

Telstra flagged more price pain was to come, saying “plan pricing will include an annual review and may increase annually” with inflation.

Why is it okay for Australian businesses to lift their prices in line with inflation, and to earn record profits, but it is not okay for workers to receive wage increases in line with inflation when labour productivity has risen?

Real unit labour costs

The costs to businesses of hiring Australian workers has plunged amid sluggish wage growth and rising labour productivity.

Share of total factor income

Businesses are taking the largest slice of the nation’s income pie on record.

In reality, any domestically driven inflation is being caused by price gouging by Australian businesses, not workers making unsustainable wage demands. The proof is in the data, as well as anecdotally.

So where’s the national backlash against businesses like Telstra price gouging and driving up inflation? Why should Australian workers’ pay go backwards in real terms while companies make out like bandits?

Any business groups whining about inflationary pressures should take a long hard look in the mirror at their own members’ actions. They are the problem, not Australian workers suffering real wage cuts amid rising productivity.

Unconventional Economist


  1. turvilleMEMBER

    Spot on and why don’t businesses add benefits to their permanent staff – e.g. private heath, share bonus schemes etc. Make some of these subject to performance criteria. Stop hogging all the upside to such a small proportion of the workforce

  2. The Share of Total Factor Income graph should,arguably, tell the business lobby just how badly skewed things are as we are now at the same rates as during the crisis’s of the 70’s, which I’m sure they agree with, only this time it’s the workers suffering.

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