Wage anger spills onto Australia’s streets as union leader eyes power
AUSTRALIAN worker discontent is rumbling as calls to revive stagnant wages grow louder in a nation that appears set to elect a former union leader as prime minister.
In the wake of five years of pay hikes that barely covered inflation, opposition leader Bill Shorten is framing next month’s election as a referendum on wages. He’s capitalising on a renewed surge in union activism that’s seen thousands of workers take to the streets and the number involved in industrial disputes more than double in the fourth quarter to 28,400.
Shorten’s Labour is proposing significant pay rises for more than a million of the lowest earners by implementing a ‘living wage’ – a move that would prove a shock to employers and hurt an economy that’s already a costly place to do business. Underlying the push is the fact that company profits have soared almost 40 per cent since mid-2016 as wages gained just nine per cent.
“This concept of a living wage is viewed by markets and the broader business community as absolutely negative,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. “Increases that are not backed by productivity, discussions around pattern bargaining and industrywide deals is also a concern at a time where clearly economic growth is slowing.”
Higher wages wouldn’t be all bad for business if they rose in a carefully calibrated way that boosted demand and help lift inflation back toward the Reserve Bank’s target. That would in turn allow the RBA to gradually begin normalising interest rates, something that looks increasingly distant given today’s tepid wages and inflation outlook.
Australia’s prolonged weak wage growth has been a source of frustration for central bank chief Philip Lowe, who has urged workers to seek larger pay rises. In 2017, Lowe said the country faced a “crisis” in wage growth and employees needed to realise that, amid a relatively low jobless rate, they could start demanding a greater share of the nation’s economic pie.
With Australians now caught between stagnant wages and one of the world’s highest household debt levels, unions sense an opportunity.
“Workers and their families are angry,” Australian Council of Trade Unions President Michele O’Neil said. “We are here today because our wages are not keeping up with the cost of living.”