Australia was once regarded as a workers’ paradise where pay, conditions and skill levels were the envy of the world. But something is amiss.
Where once the fortunes of working people and the economy travelled hand in hand, workers have become uncoupled from national prosperity.
Australia’s record-breaking 26 years of uninterrupted growth comes as little consolation for working men and women doing it tough. While we’ve technically avoided recession for almost three decades, many workers are living in recessionary climes every bit as punishing as the infamous recession we had to have in 1991.
The headline indicators of economic growth mask a crisis of confidence in the suburbs as debt-laden households nervously ponder their financial stamina. Employment was once the reward of a prosperous economy but many Australians are in a virtual state of permanent job insecurity.
The unemployment rate hit a four-year low of 5.5 per cent in May but workers on the ground know things are more fragile than such bumper figures suggest.
They know many employers are struggling, maintaining their viability with relentless cutbacks. Those who get to keep their jobs know they can expect little movement on their pay. Wages growth is at its lowest since the 1991 recession.
Add to that the penalty rate cuts for hospitality, fast food, retail and pharmacy workers, who have lost the benefit of the minimum wage increase – and are likely to suffer a wage cut in 2018 and 2019.
The proportion of national economic output paid to workers is at an all-time low, based on trend estimates. Total labour compensation fell to 51.5 per cent of national GDP in the March 2017 quarter, the lowest since 1964.
Workers also know that employers are relying more on casual and part-time labour and the use of contractors and labour-hire workers. This not only keeps a lid on wages growth but also means the underemployment rate – employed workers wanting more hours – is at a record high of 8.8 per cent.
While households are walking on eggshells the Turnbull government gloats that it is delivering “jobs and growth”. But Reserve Bank governor Philip Lowe is concerned about wages.
Dr Lowe recently called on workers to reclaim their stake in the Australian economy by seeking wage increases. In an unusually forthright speech, he described the static wages growth as a “crisis”. He recognised that workers concerned about job security were unwilling to press for better wages.
“People value security and one way you can get a bit more security is not to demand a wage rise,” he said.
With annual wages growth of just 1.9 per cent, Dr Lowe said it “would be a good thing” for workers to “ask for larger wage rises”.
The absence of a clear recovery after the global financial crisis has left many workers in wages limbo. Workers prepared to show wages restraint in 2007-08 have not had the “bounce back” in wages that normally comes with a clear-cut recovery.
The post-GFC period also coincides with enormous advances in digital technology which has transformed business models and whole industries.
A report by the Committee for Economic Development of Australia estimates that 40 per cent of Australian jobs that exist today are likely to disappear in the next 10 to 15 years due to technological advancements.
And yet from the Turnbull government, or the opposition for that matter, there has been no sign of an honest “conversation” about the enormous changes and challenges that face workers. No blueprint for Australia’s transition to a digital economy, no investment in the training and reskilling that will be so vital to Australia’s future, no apparent understanding of what the workplaces of the future will look like.
The government is entitled to celebrate the record run of growth. But it would do well to understand the consequences of simply looking the other way as workers languish in prolonged recession-like conditions and households teeter on the brink of financial despair.
A workforce under sustained distress will ultimately impact on living standards, consumer confidence, financial viability and national productivity. The workers’ paradise, after all, was a paradise shared by all Australians.
Leo D’Angelo Fisher is a former associate editor and columnist with BRW and columnist for the Australian Financial Review. He was also a senior writer at The Bulletin magazine.