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.