Opinion: Reduce executive hours and save 30,000 jobs

RBA needs 30,000 more Australians to lose their jobs to hit its unemployment target, but should wealthy executives take the hit instead of mortgage holders?

Why not target people with lots of money and no mortgage?

ANALYSIS

A recent report by Roy Morgan found that about 1.3 million Australians are currently experiencing mortgage stress.

They desperately need a rate cut, but for tens of thousands, the only way to get decent mortgage relief may be to lose their jobs.

One of the economic factors the RBA monitors closely when making cash rate decisions is unemployment and, ideally, it would like to see unemployment reach 4.5 per cent.

Before the July decision to hold, unemployment was still at 4.1 per cent.

Of course, the next set of data revealed it had jumped to 4.3 per cent, which meant there were about 30,000 more people out of work.

With Australia’s labour force around the 13 million mark, we’d need a similar number to lose their jobs again to get to 4.5 per cent.

Are you one of the 30,000 odd Aussies who are still needed to take one for the team in order to bring about more mortgage relief? Of course, a rate cut won’t do much for you if you have no income.

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The good news is that the 4.5 per cent figure doesn’t need to be achieved immediately.

RBA Governor Michele Bullock said she wants to see a gradual easing in employment.

“Having your hours cut is tough, but it’s often preferable to losing a job altogether,” Ms Bullock said, while addressing a fundraising lunch last week.

Michele Bullock, Governor, Reserve Bank of Australia. Picture: Monique Harmer

I agree. Perhaps we could begin by cutting Ms Bullock’s hours so she works four days a week. That would take about $200,000 of potential spending out of the economy, or the equivalent of the jobs of two average wage workers. Ms Bullock would just have to tighten her belt a bit and make do with $800,000 a year. Luckily for her, she doesn’t have a mortgage on her own home because she paid it off on a half price interest discount deal for RBA employees.

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Perhaps also Macquarie Bank CEO Shemara Wikramanayake could pro rata her $24 million earnings and get by on just $20 million a year? It will take a bit of adjustment, but if she scrimps and saves and perhaps packs her lunch a few days a week, she could save the jobs of 40 average Australians and help get relief for those with mortgages.

Macquarie CEO Shemara Wikramanayake made about $24 million last year. Picture: John Feder.

Repeat the process for a few other of Australia’s highest paid financial executives and we may actually save a few thousand average jobs.

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According to the ATO, there are nearly 15,000 Australians earning $1 million a year (bearing in mind, that’s ‘taxable’ income, so likely a fair few more). If each of these went to a four-day week, it would mean 30,000 average salary employees could keep their job without any serious inflationary risk.

Regular Aussies trying to pay off mortgages are always the ones who get punished in order to keep inflation under control.

But doesn’t it make much more sense to reduce the spending capacity of rich people who don’t have mortgages?

Originally published as Opinion: Reduce executive hours and save 30,000 jobs