We have record low wage growth in Australia because governments have been enabling this outcome via policies specifically designed to achieve this. The Fraser and Howard governments in the 1970s and 1990s ramped up the pressure by banning industrial action by unions and attacking their membership through non-union agreements. Unions were made out to be the bad guys in continuous attacks on their character in the public eye. The Abbott and Turnbull governments created anti-union organisations like the Australian Building and Construction Commission and the Registered Organisations Commission. Coalition governments have over several decades broken the effective power and influence of the union movement. Why do we have record low wage growth in Australia? Conservatively minded government policies have designed it this way.
Little Or No Wage Growth Over Decades
In concert with these suppressing industrial relations policies the economic management has stressed the constant danger of wage rises to the risk of high inflation. Warnings about the need for tightening fiscal and monetary policies to combat any sniff of a wage raise explosion have so successfully dampened this that Australia has recorded decades of dead wage growth. Employers have been directed by government policies not to increase wages wherever possible. Australia has become more Americanised, where workers are paid poorly and investors reap the rewards in company profits. The rich get richer and the poor slip further down the gurgler. Aspirational politics have pushed the gap between wealthy and poor further and further apart. Morrison was pushing this agenda throughout his tenure at the top.
“Median wages of production workers, who comprise 80 percent of the workforce, haven’t risen in 30 years, adjusted for inflation.” – Robert Reich
This is a recipe for social instability and the destruction of democracy. Look at the United States where Trumpism is the ugly icing on the cake of a divided nation beginning to tear itself apart. The great American dream of becoming rich and famous is built on the exploitation of others. A brief knowledge of history will reveal the numerous civilisations and cultures ripped asunder by social injustices caused by extreme inequality. Ancient Rome and the Chinese Dynasties are but two salient examples.
“It is almost universally true that violence has been necessary to ensure the redistribution of wealth at any point in time,” said Walter Scheidel, summarising the thesis of The Great Leveller: Violence and the History of Inequality from the Stone Age to the Twenty First Century, his newly published book.
“High inflation, in short, tends to worsen inequality or poverty because it hits income and savings harder for poorer or middle-income households than for wealthy households. Households that have recently escaped poverty could be pushed back into it by rising inflation.” – The Brookings Institute (March 2022)
Australians need to wake up to the fact that they have been gulled and take steps to stop the worsening situation before it is too late.
The ABC reported, an RBA study into reasons for depressed wage growth in the Australian economy identified the rise in employer concentration. This has delivered a mismatch in power between employees and employers at the negotiating table. The study pointed to wages in regional Australia being lower because of this paucity of employment and employer options. The concentration of companies, more generally in Australia, through takeovers and mergers has meant less choice in the Australian employment market.
Union membership has dropped from around 40% to 12% in the last 30 years. Unions are all about providing individual employees with greater power in their negotiations through numbers. The absence of this has emasculated workers in their bargaining power for higher wages. Since the 1970s the RBA and successive governments have held the wage-price-spiral as the prime cause for inflation in the economy. This is no longer the case in 2022-23, with a profit-price-spiral identified at the root of our current high inflation in Australia.