Wages Growth Remain Stuck

Will this impact on property markets in Australia??

In normal times, wages should be rising comfortably faster than consumer prices

Is a bigger pay rise just around the corner?
ABC News - 16 August 2017

Private sector lags public on health, education
The news was worse for those working in the private sector, despite Commonwealth public service enterprise bargaining disputes that have left many federal public servants without a pay rise for several years.

Private sector wages rose a paltry 1.8 per cent over the past year, while public servants saw an average 2.4 per cent pay rise.

The public sector pay increases were boosted by health care and social assistance, which was the sector with the highest pay rises, averaging 2.6 per cent.

Education and training was the sector with the next highest average pay increase, also boosting public sector wages.

The mining sector continued to languish, with pay up only 1.1 per cent, although it had a strong June quarter gain.

That was reflected in the state figures, which showed Western Australians continued to have the lowest pay increases of just 1.4 per cent, while South Australians and Northern Territorians saw an annual 2.1 per cent wage gain.

How did your industry fare?


Health care and social assistance workers had the biggest annual pay rise, miners the lowest. (Supplied (Source: ABS)

 

Wage growth sluggishness is a western world phenomenon and is driven largely by lack of organisation in workplaces (very few unions / strikes), and technology.

This will decrease the ability for people to raise rents . . . As to price impact, i dont think east coast boom as been driven by local ppl celebrating their 5% pay rise with a new house / IP purchase anyway

 

There has been an ideological push to break the union movement by neo liberals inspired by the thatcher gov. In Australia we have had three consecutive liberal gov pushing the same agenda. Hewsons "acme fight back",(although never came to be put into practice), Howards war on the water front and "Workchoices". Now the Abbott/Turnbul government targeting the CFMEU. It is not merely coincedence that this wage growth decline is correlated to falling union representation. What people failed to take into consideration is wage increases in unionised workplaces/industries set a bench mark and flowed to the non union sector.

 

The biggest contribution to low or no wage increase in the private sector is competition.
Competition isn't a bad thing. Have to have the right attitude to it though. Those who do usually come out strong...and very marketable.

 

It's a zero sum game. Competition among the workers only helps the Capitalists who employ them and will pay as low as possible.
Competition for these people is a competition for who will work for less.
India has the best competition in the world ATM ... China not so much.
Let 10 to 20 million more of us Indians into Australia and you will soon see how competition for the workers ends up.

 

Do you have any evidence to support this statement? I doubt it. The data doesn't support it.

Wage growth was strong up until a decade ago and there was even more 'competition' and productivity gains occurring.

 

What data are you referring to? What does the data suggest?
I would have thought that competition does not support wage growth - the more supply eg employees in the market , the less wage inflation.
However, that very same competition is vital for growth of new (and often higher paying) companies, jibs, industries. San Francisco/silicon valley is a good example of that.

 

In the short term yeah possibly it's zero sum . But not in the long term. Very few cities have increased it gdp sustainably over the long term without the above mentioned competition. Exceptions maybe geographical lottery winners of some gulf countries... And even they are diversifying away and encouraging mote competition.

 

On the other hand, look what competition did to Detroit. At the bottom competition hurts individuals but might benefit the group (Chinese peasants earn better wages in factories than on farms, but Western manufacturing gets killed). At the top, the most valuable get higher and higher pay. The CEO doesnt care whether the workers are in India or Australia. The worker in Australia definitely cares.

 

We have hit upon the central economic question of 2017. Without getting too technical.. but does the Phillips curve still work.

Essentially, why are we at full employment, stock market highs, growth strong and yet no wage gains.

What you are referring to is a failure of neo-liberal 'trickle down economics'.

Silicon valley. Ok lets take Apple as an example. It creates SOME highly paid highly skilled roles. But on a larger level creates MANY lower paid offshore roles and the ppl who work in Apple California stores still get paid $8 an hour...

So net net you will find Apple has contributed to Wage Growth in China and detracted from it in USA.

Hence it is a western world problem.

 

Automation is also playing its part in recent years of jobless growth,
Rising productivity, rising profits but stagnating/falling salary in real terms is an outcome of Automation.

With AI automation getting better and better, underemployment will keep increasing and salary stagnation is here to stay.
Coming decade is a #DecadeToDeleverage, what worked for last two decade may not work for next.

 

"May". How good is your crystal ball? What did you do when the gfc hit?

 

I got my crystal ball from ebay,
for 50 cents and postage free,

I was sacked a little later,
How 'salaried' Sam lost his Wiggle

What about you...

 

I saw that sydney was historically cheap based on yield, thought itll be good long term, and cautiously bought into sydney.

 

"One day it will crash" is fine if you just think rising house prices is a social evil. Doesnt matter if your never right. If you want to make some money, though.....

 

Scott Morrison says higher profits should mean wage rises 'flow through' soon

Treasurer cites heavily unionised construction sector as an example of growth leading to better pay for workers

The treasurer, Scott Morrison, has said he believes improved profits “should flow through to higher wages”, while citing the heavily unionised construction sector as a model.

In an interview for ABC’s 7.30 on Thursday night, Morrison returned to the theme of the May budget to claim there were “better days ahead”, citing profit and investment figures but acknowledging “we haven’t seen a flow on to wages yet”.

Wages growth in Australia has been stagnant for four years, leading to an increasingly assertive Labor opposition campaign on economic inequality.

Asked about poor wages growth, Morrison said other economic data was starting to improve, citing non-mining investment up 2.6% in the June quarter and the fact it was projected to be more than 5% in the next financial year.

“We’re starting to see that investment come through, and investment leads to the profits which leads to the wages growth,” he said.


Asked if profits always led to wage rises, Morrison said: “I think it should – that’s the view I hold.”

He said profits had gone backward by 0.8% “for many consecutive quarters” but the most recent two quarters had shown profits lift “largely off the back of commodity prices”.

“We need to see that sustained. And I believe once you see that sustained … it should flow through to wages.”

Asked about Reserve Bank of Australia governor Philip Lowe’s statement that it “would be a good thing” if workers now asked for a pay rise, the treasurer claimed what Lowe had “actually said was just a common sense economic observation” that when unemployment went down and profits improve, tightness in the labour market then caused wages to rise.

“That’s what we’re starting to see, we’re seeing it in things like the IT security sector, we’re seeing it in some parts of the construction sector, where there’s big construction jobs going on, particularly because of the big public investment going in.”

The Construction Forestry Mining Energy Union has recently sought higher wage rises in bargaining to compensate for conditions stripped out of collective agreements by the Turnbull government’s Australian Building and Construction Commission bill, as had been predicted before it passed.

Before the election Malcolm Turnbull promised the Coalition would stop excessive pay demands from the CFMEU because the ABCC would prevent industrial coercion.

On Wednesday the education minister, Simon Birmingham, encouraged universities to follow the lead of Murdoch University, which successfully terminated its collective agreement, throwing workers back onto the award rate of pay.

Labor’s shadow employment minister, Brendan O’Connor, said this amounted to the Turnbull government “advocating for the reduction of wages and conditions”.

On 7.30 Morrison said the “emerging economic consensus” was that his prediction in May of “better days ahead” was correct.