Why isn’t Albanese promising wage hike?

HOW could a prime minister Anthony Albanese not initiate immediate big pay rises across the federal public service, using it as a pacesetter to force bigger wage rises generally across the economy?

How could a PM Albo not hit the ground running by demanding the Fair Work Commission deliver a 5.1 per cent hike in the minimum wage, to match inflation?

Indeed, why isn’t he right now, as I asked last week, promising regular wage indexation for at least the public sector, so that the pay rises would at least keep pace with inflation?

All this to me is the undeniable logic of Albanese’s – true, unknowing and, bluntly, blundering – rhetoric.

I say this after Wednesday’s ABS wages data and the Opposition leader – or should that be PM-in-waiting? – bemoaning the way real wages had gone backwards by 2.7 per cent over the year to the March quarter.

We’ll leave aside the fact that’s far too simplistic; confirming yet again the wannabe-PM doesn’t have a clue at how the economy actually works, far less what is actually going on in the economy right now.

He, or whomever was in his ear, had just done the simple arithmetic. CPI inflation of 5.1 per cent. Wages shown by the ABS’s WPI (Wage Price Index) up 2.4 per cent.

Therefore real wages down 2.7 per cent.

Right, so if it’s such a terrible thing, if it’s such an indictment on the Morrison government, why aren’t you putting your – well, actually, our - money where your mouth is?

Why aren’t you out there, loud and proud, promising an Albo government would ‘do something’ about it, in the two areas where they precisely could and immediately?

The first is the submission on the minimum wage.

But even more, as that’s just a government ‘suggesting’, where you could actually deliver and pretty much immediately public sector wages.

And then using the ‘bully pulpit’ to demand the private sector follow suit.

Maybe he has just the faintest inkling that would set off exactly the disastrous wages-prices spiral that would devastate the economy, send hundreds of thousands into the jobless queues, and would ‘devastate’ his own government and his own future. If so, I suppose we should be thankful for small mercies.

That we might be getting a PM who is all bluff and bluster, but thankfully that’s all he is.

There are two core points to be understood about the WPI data.

The yearly figure contains not just a lot of history but deepest, darkest Covid history when nearly 60 per cent of the Australian economy – NSW and Victoria – was locked down for months, and wage rises were not exactly on anyone’s agenda.

A better guide is wage increases in the ‘opened up’ December and March quarters.

Both had 0.7 per cent increases – approaching a 3 per cent annualised rise.

Yes. That’s still way below the 5.1 per cent CPI rise – which in itself understates current inflation (on the same, last two quarter, basis) which is running closer to 7 per cent annualised.

But it is getting closer to the 3-4 per cent wage increases which would lock in 3 per cent-plus inflation.

And it’s hard to see how wage increases could be kept that low, if inflation does persist in the 5-7 per cent range.

That’s the second point. The really revealing number in the ABS detail was the 3.4 per cent average pay increase in the private sector of the true, small, proportion that actually got one in the quarter.

That’s the highest since 2013 - suggesting that wages have started to chase prices.

The RBA will hike again in June, either 25 points or the 40 it should have done in May. After that, it’s month to month.