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Incompetence and Expediency

Despite overly optimistic, but what should be called laughable forecasts in the budget, wage growth in Australia is now the lowest it has been since the mid-1990s. And it’s not hard to see why.

Private-sector annual wages growth, at the March 2017 quarter, was 1.8%. The latest labour force data released yesterday by the Australian Bureau of Statistics shows a modest decline in the unemployment rate from 5.9% to 5.7%.

The reason is, full time employment fell by 11,600 jobs, and part-time employment increased 49,000. As a consequence total hours worked fell by 0.12%. But here’s the kicker. Underemployment rose by 0.1% and there are now over 1.8 million Australians who a) want to work and b) want more working hours, but are under-utilised.

In seasonally-adjusted terms, 58 per cent of the net jobs created in Australia in the last 12 months have been part-time. When one grasps the reality of this depressing state of affairs, it is not hard to see why wages growth is so low.

When Scott Morrison brought down his fiscal statement (budget) last week, he predicted wages growth over the forward estimates to be 3.5%. This then, is factored into the tax revenue estimates and the broader bottom line. His projected surplus in 2020-21 is based on a wage explosion. That is the stuff of fantasyland.

It is laughable to the point of negligent. It’s as if a bottom line figure was established first and the rest put together to justify it. This is the way of it with the present government. It is incompetence and expediency played out to mask any realistic plan for job creation.

They simply do not know what to do, or do not want to. Either way, they are traitors to the nation they govern. The participation rate while steady at 64.8 per cent is well down on the most recent peak in November 2010 of 65.8 per cent when the labour market was still recovering from Kevin Rudd’s fiscal stimulus.

The answer, therefore, is blindingly obvious. Unless the government undertakes a significant spending program, targeted to soak up the idle capacity in our workforce, Scott Morrison’s budget estimates will not be realised.

There is no evidence that there is sufficient activity planned in the budget that will make this happen, even allowing for the additional infrastructure allocation announced last week. It is too little and too remote.

Despite the bluff and bluster coming from both Turnbull and Morrison, the economy is going nowhere. In the meantime, a debt burdened private sector is drifting precariously toward a precipice that has the capacity to cause a monumental economic collapse.

And we can’t say we didn’t see it coming.

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19 comments

  1. Max Gross

    “…a bottom line figure was established first and the rest put together to justify it.” John, mate! You just nailed the LNP’s every policy!

  2. Halfbreeder

    A damning statistic of turnbulls LNP inadequacy and lack of action on jobs is the fact that while aust avoided recession during the gfc its unemployment rate is higher than the usa that sufferred badly during the gfc. 5.7 in aust to 4.5 in usa. the reason for this is the fed reserve in the usa actively pursues policy intended to facilitate full employment while here the reserve bank seems almost entirely obsessed with inflation which is well below the target range (2 -4 %). The reserve bank’s singular obsession with inflation is a breach of its duties under its act. Turnbulls LNP policy on jobs consists entirely of shifting the blame for unemployment onto the victims. that is onto the unemployed.

  3. Halfbreeder

    shouldnt the headline of this article include ‘dishonesty’

  4. longwhitekid

    I think in real terms unemployment is much higher ,more like 9.4% with the rest made up from the under-employed. A total of around 24.3% were the last real figures I read that we’re not being told. Not sure where you’re getting your figures from, ABS filtered through that beacon of truth Michaelia Ca$hconverters? Couldn’t see any references attached.

  5. Zathras

    Most of the jobs created were part-time. It doesn’t take much talent to convert a full-time job into 3 part-time McJobs, which is what’s been happening for years.

    That – plus the “official” unemployment rate hovering around the “ideal” 5% – is what’s been keeping downward pressure on wages for years while the welfare bill creeps ever-upward to compensate the growing number of under-employed.

    The Government can announce reductions in unemployment as some sort of economic progress but in reality it’s just business as usual, meaning a continuing reduction in comparative wages growth and increasing homelessness and poverty.

  6. Henry Rodrigues

    Turdball who buggered up the NBN to the extent of $54b, and Morrisson who is totally innumerate, both fellows with not a clue about what to do next, but to blindly and slavishly adhere to the agenda of the IPA and that old scrote, Murdoch. Expecting these fools to somehow recognize the dangers the Australian economy is in, after 4 years of mismangement is just whistling in the rain storm that’s about to hit us. Even giving them credit for copying Labor’s ideas, its too little too late. They couldn’t even get the sums of their business tax cuts right. What a hopeless pair of fools..

  7. Frank Smith

    The official unemployment rate is meaningless – total hours worked per month is a far better indicator, particularly when work is moving from full-time to part-time. By that measure the figure has not kept up with population growth since 2012. A huge inditement on Jobson Growth and a root cause of the economic problems we have.

  8. Marcus

    Lets not forget that Labour Market participation rates are also at their lowest since 2013.

  9. Alan Luchetti

    “His projected surplus in 2020-21 is based on a wage explosion. That is the stuff of fantasyland.
    It is laughable to the point of negligent. It’s as if a bottom line figure was established first and the rest put together to justify it.”

    Yep, and the bottom line should be a meaningless residual, not the be all and end all. Fantasy to justify fantasy.

  10. darrel nay

    What is everyone worried about … public sector wages rose at 2.4% and outstripped inflation. It seems the public sector is thriving and the rest of us can just ‘eat cake’.

    Cheers

  11. Harquebus

    “wage growth in Australia is now the lowest it has been since the mid-1990s. And it’s not hard to see why.”
    Peak oil mates, peak oil.

    “The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise.”
    https://ourfiniteworld.com/2016/09/20/why-really-causes-falling-productivity-growth-an-energy-based-explanation/

    Time and time again, John Kelly demonstrates that he just doesn’t have a clue.

    Cheers.

  12. Halfbreeder

    with the aid of employment agencies an employer can carefully organise its labour force so that none of its casuals are engaged for enough hours to earn anymore then $450 per month and thereby it can avoid paying superannuation on wages paid to casual workers. Consquently, it can reduce its wage bill by 9 %. This superannuation loophole is an incentive to the casualisation of the work force and contibutes to the growth in casual and part time work. That is, to underemployment and the loophole should be closed.

  13. Freethinker

    I need help!
    I just wonder if I interpreting this correctly or I am going bongos!
    I got to an stage that there is so much stupidity and incompetence that I starting question myself if it is for real or my imagination it is plying up.

    An Australian government agency is considering a multi-million dollar loan to a South African coal mine that would be in direct competition with the Adani Carmichael coal mine.
    https://www.theguardian.com/business/2017/may/20/government-may-fund-south-african-mine-that-would-compete-with-adani

  14. Gangey1959

    @ Halfbreeder. Am I to understand that if I don’t earn $450 per month from employer X then ”he” does not have to pay me ANY super on the let’s say $400 that I have earned?
    What a load of crap.
    There is already a 3 month waiting period between when I earn any super, and when it has to be paid into my preferred fund. What more do they want?

    ”Dear pm trumbles.
    I give up, but I have an offer for you to consider first.
    I will work for FREE. For 35 hours per week for 45 weeks per year for the next 13 years.(Then I’m 70 and all bets are off)
    All I want in exchange is :
    A house. Of moderate quality. Somewhere up to 3 hours out of Melbourne. On about half acre. (And a lawnmower)
    My 2000 Dunnydore fully serviced.
    $200 per week groceries.
    3 Tanks of petrol per week.
    My utilities paid.
    Internet. Pref NBN but you’re the man.
    Anything medical I might need.
    Anything else that springs to mind.
    What do you think ?
    Signed
    Fed up to the back teeth but there is an election coming and you’re fucked.”

  15. Kronomex

    I look at the photo at the top of the article and all I can think of is a panel from from a 1950’s (slightly changed) romance comics.

    Malcolm’s thought bubble: Oh…oh, why is Scott ignoring me and why can’t I tell him how I feel. And to cap it off I have pimples on my nose, now no-one will like me.
    Scott’s thought bubble: Duh, if I use my toes I can count up to 20.

  16. Jennifer Meyer-Smith

    Well said, Gangey1959.

    Muck and Snotty are quite capable of providing those things. They just need some re-education to understand Modern Monetary Theory where the government can fund a decent standard of living for every person and doing so would help to keep the economy vibrant.

    And what the heck, they could even pay you a decent wage because the properly run economy as identified by MMT allows a job guarantee for everyone too!

  17. helvityni

    Don’t be shy boys, just kiss and make up…

    (my take of the above pic)

  18. Mick Byron

    Alan LuchettiMay 19, 2017 at 9:13 pm

    “His projected surplus in 2020-21 is based on a wage explosion. That is the stuff of fantasyland.”
    I couldn’t agree more and I fear for 2018 let alone 2020-2021
    I did my time as a tradie and now run and own a small construction company employing 8 tradies and 2 apprentices and I have a major concern as to whether I can maintain the employment of my current team.
    Training our own qualified tradespeople is now a dying art with “The number of Australians beginning an apprenticeship has slumped by almost 20 per cent over the past year” 2016
    I try to employ local well trained and qualified staff but come up with a competition particularly from the larger construction companies, able to under cut me and have little interest in our local labor market . who seem to have a majority of 457 workers,many I truly believe with far lesser skills than Australian trained who served their time and had the support of a decent TAFE system till it was white anted.From my experience 457s work for about 20% less than Aussie tradies and lack the skill base of the homegrown and trained tradesperson.I can’t continue to compete when the playing field as so uneven and in the event I have to reduce my staff I only see a few more 457s arriving to fill the gap {not with me though]
    I would think that when my grandkids are old enough to enter the workforce they will be asking “what is an apprentice gramps”
    We have sacrificed our young to the quick imported worker with minimum conditions and no job security all for the profit greed of the few.
    Why are we sacrificing our youth and throwing them on the scraphead of unemployed to live at poverty levels and make their lives unbearable with the unreal requirements to claim unemployment payments?
    Youth are our future and I am ashamed at the lack of foresight and attitudes of an LNP government that has all but abandoned them

  19. Halfbreeder

    Gangey. yes your understanding is correct. super only becomes payable by any employer if the worker has earned $450 or more in a month with that employer. if under that then the employer does not need to pay super for that individual employee. thank both parties for that loop hole. when alp introduced it the cut wage was 350 per month but howard increased it to 450. in other words, given that superannuation is really just defered wage increases – thats the way it was introduced by Keating/Hawke as a way of containing wages to contain inflation – it means that the worker earning less than 450 per month not only gets no super but has also missed out on the pay rises the super was supposed to substitute for. this is what labor put in place and it gives employers access to relatively cheap labour at a 9 % discount while encourgaging casualisation of the work force. any wonder why casual jobs are rising and full time decreasing. not sure how much impact this would have on casualusation of work force but i reckon it would hace some.never believe the alp when they tell you they act in your interest. they dont. they speak with forked tongue. OPPOSE THE MAJOUR PARTIES!

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