Increasing expert demand for faster wage growth
Low wage growth has now well and truly established itself as a key issue this federal election, as reports from experts continue to come out describing a wages slowdown in Australia and the dangers it poses to the nation.
The Reserve Bank of Australia (RBA), Treasury, Australian Council of Trade Unions (ACTU) and others have all in recent months released findings describing sluggish or stagnant wages growth and indicate the values of faster wage growth to the economy and society. An open letter released today - signed by 124 labour market, employment relations and labour law experts – on the ‘Benefits of Promoting Faster Wage Growth’ is the latest contribution to this growing mound of evidence.
The letter calls upon governments at all levels to enact “positive policy action to strengthen industrial supports for higher wages”, citing Australia’s slowest sustained rate of wage growth since the end of the Second World War, with nominal wages only growing at about 2% per year since 2015.
The impacts of such slow wage growth include weaker consumer spending, greater household indebtedness and financial stress, slower growth in government revenues, and widening inequality; findings echoed by the ACTU’s landmark report ‘Inequality in Australia: An economic, social and political disaster’ released a few weeks ago.
Here, the report's authors argued the need to use “wage, tax and public expenditure policies sensibly and pragmatically to reduce inequality and boost growth” as a means to mitigate a wide range of social problems by creating a more equal and inclusive society.
“This is not a problem that is going to fix itself”, added Dr Jim Stanford, one of the initiators of the letter, “We need to see a policy response from governments at all levels – and an acceptance that lifting wage growth can help the economy, not harm it.”
With the national election to be held in the next few months, and wage growth and inequality a prevailing and persistent issue, the policies of major political parties regarding: wage growth, income and wealth distribution, precarious working conditions, industrial relations laws and award system, and social and economic inequality will be of great interest to the Australian voting public.
There is a persuasive and growing case for structural and institutional interventions to promote wage growth, which is just one of the many reasons why the IEU is signed onto the ACTU's 'Change the Rules' campaign, to improve workplace relations and close the widening gap of inequality in Australia.
You can read the full letter here, as well as the full page advertisement in the Financial Review below