The ‘jobdobber’ hotline is another policy aimed at keeping wages low
This week came further confirmation that even in the midst of a wages crisis, the Morrison government remains determined to push wages even lower. When you get down to it, there are really two things that define the Liberal party’s economic agenda: low taxes for wealthy people and those who own companies, and low wages growth for everyone else.
The ambition of every economic policy the Howard, Abbott, Turnbull and Morrison governments have pursued over the course of their time in power since 1996 (and even beforehand when in opposition) has been to produce these two results.
This past week we saw the government announce a meagre increase in the jobseeker rate and an increase in mutual obligations. They also announced a hotline for employers to call to dob in unemployed people who refuse job offers – a job offer that might be declined upon discovering the wage and conditions.
Such a policy serves to keep wages low – employers can offer lower wages and know that a threat hangs over people should they refuse.
It is one of the most bastardly policies this government, which specialises in barstardry, has devised.
And it comes at a time when low wages growth is now a permanent feature of the economy.
Even in the midst of a pandemic, where economic data from GDP to retail spending has gone absolutely nuts, wages continue to grow at the exact pace expected over the past five years.
Graph not displaying? Click here Three years ago when Gareth Hutchens and I did a report into low-wages growth, wages were growing at 2% a year. This week the Australian Bureau of Statistics revealed that in 2020 wages grew by just 1.4% – a record low for any calendar year.
It might be low, but it is not an aberration.
When unemployment goes up, more people are fighting for each job and so employers are under less pressure to raise wages to attract people to apply, or to stop current employees
leaving for a better-paying job.
And so in March last year when the unemployment rate was 5.2%, wages grew at an annual rate of 2.2%. In December when unemployment had risen to 6.6%, wages growth had slowed to 1.4% – exactly in line with the trend since 2016.
The problem is that trend has completely fallen from what it used to be.
Up until 2012 an unemployment rate of 6.6% would be usually associated with wage growth of around 3%.
Even when wages growth was a bit lower than expected they were well above what we now have. In March 2000 the unemployment rate was also 6.6% and wages grew by 2.7% – a rate we have not had for nearly seven years.
Wages now grow around 1.5% slower for every level of unemployment. Or to put it more starkly: for wages to grow at the pace they used to, unemployment needs to be around three percentage points lower than in the past.
The Reserve Bank has said it will not raise interest rates until inflation growth is consistently above 2% and for that to occur wages would need to grow at around 3%.
In the past that would have meant getting unemployment below 7%; now it means below 4%.
Less worker bargaining power, more restrictions on industrial action, less need for employers to negotiate in good faith, enforced lower wages growth in the public sector, and threats to the unemployed are policies designed to keep wages down – and they are working.
Even in the midst of a pandemic, even with all other economic data going haywire, wages are behaving as expected – and that expectation is now terribly and permanently low.