Contributed by Joe Montero
A report from the McKell Institute says average wages growth has been falling since 2013. Average wages are now $250 a week below where they would be if their growth had continued as before.
The report says government policies are behind this. These include public sector pay freezing, increase in visas for temporary migrant workers, inaction on wage theft, the shift to the gig economy, and the failure to sufficiently increase the minimum wages. These factors have undoubtedly had an impact.
Unfortunately, the McKell report does not deal with a more fundamental cause. This is the labour market is undergoing structural change. The cause of this is the failure of the economy to grow sufficiently in real terms.
The source of profit has shifted from being drawn from genuine growth.
Profit is now being increasingly dependent on the lowering of the wages share, speculation, government support.
The government does not create this. What it does do, is to assist it. The reason? This works for those who are benefiting from it.
This has caused hardship to millions of individuals and households. It also causes further long-term harm to the economy, by adding to the progressively loss of its capacity to meet the needs of society, the foundations of the economy begin to crumble.
Australia no longer has a manufacturing base to speak of. Innovation has taken a dive. A considerable part of infrastructure is lagging where it should be. The financial system is out of control. Banks are seen to amass huge fortunes. At the expense of everyone else.
The following graph shows the most recent decline in industrial production.
The tax evasion industry runs rampant, and government loses its capacity to fund its responsibility to provide services and play its important role as a player in the economy. This has got to end.
It is vital to grasp that this is going on. This knowledge points to the need to call on any government to reverse the present approach. There must be action to contain and turn around the structural change in the economy and therefore the labour market.
Policies must lift wages, push down the use of casualised work as a cheap source of labour, bring a substantial increase to all incomes. An extra $254 a week would be a good start.
These changes must be backed by moves to take on bottlenecks blocking economic progress.
Speculation as a major source of profit must be curtailed: Dependency of big business on government must end:
The rise of a new manufacturing industry must be supported:
Control over the banks and financial system must be imposed, to ensure they act in harmony with society:
The tax evasion industry must end, to provide the funds necessary for the public sector to provide services and use policy to generate an economy for all.
Any part of this will be actively opposed, by those few who are benefiting from the way things are. The answer to this, is to build support from the broader community, by involving its participation in bringing the changes.