Malcolm Turnbull just doesn’t get it. Or, perhaps he does, and he is hoping against the odds that the situation will improve by the time he finds himself forced to call an early election.
The problem is wages growth, or more particularly, the lack of it. He has been trumpeting the success of his government’s ‘jobs and growth’ platform now for months, citing the creation of 377,000 jobs in 2017 as evidence of that success.
The problem is, that so many jobs created should, by economists’ reckoning, have generated a competitive demand for labour which in turn, should have brought about a more competitive market in wages. But it hasn’t. So where have the profits generated by this job’s bonanza gone?
This is Turnbull’s dilemma. How does he explain to those thousands of white and blue-collar workers who are employed by highly profitable firms that their share of the rewards that they helped produce, have been soaked up by executive bonuses and share buy-backs?
When will it be the workers time to reap some of the rewards?
“Wages growth will come,” he says, “because a stronger economy results in more investment, more jobs and more intense competition between employers for workers.”
Turnbull should think about who he is talking to. His comments might go down well with the business community who are more than happy with the status quo, but it’s unlikely they will cut with average worker who has been starved of any of any meaningful wage increase for nearly five years now, while shouldering significant increases in the cost of living.
By any measure, most Australian workers have gone backwards. It has been a gradual deterioration since 2013 and a far cry from the promises the “adults” made when they rubbished Labor’s handling of the economy between 2007-13.
The very fact that the 700,000+ unemployed people today is the same as it was when the coalition won government in 2013 should send warning signals to every coalition member in Canberra. It simply doesn’t add up, unless one concludes that the job’s bonanza has nothing to do with government initiatives and everything to do with population increase.
It’s not peculiar to Australia. In the UK, Europe and the US, workers are experiencing similar imbalances, which makes one wonder if we do all exist in a matrix. Turnbull, however, should know that it doesn’t matter how good the economy is performing if the voters are not sharing in it.
He can say whatever he likes, but nothing resonates with people more than having to stretch the budget further to accommodate rising food and insurance costs, let alone mortgage rates. And if he is sprouting his government’ success while families are struggling to pay their bills, that will end badly for him and the government.
Reserve Bank boss, Philip Lowe, is on the worker’s side, saying they should demand higher wages. He knows that some banks have already increased mortgage rates, and if interest rates around the globe start to rise generally, he will be forced to follow suit to protect the dollar. Any interest rate rises here, without a pay increase will precipitate a rise in unemployment.
The time for self-congratulatory back-slapping is about to end for the government and some serious explanations given for the present wage/growth imbalance. There’s an election coming, most likely this August or September, and the clock is ticking.