Political leadership needed on productivity, pay rises

Amid rising prices and interest rates, wages are intensely important to wage earners and small-business owners paying staff. They also matter to jobseekers, as John Howard reminded the public this week when he quoted Britain’s former Labour prime minister Tony Blair: “Fairness in the workplace starts with the chance of getting a job.” While the subject is generating heat during the election campaign, voters are entitled to hear more substantial plans from the major parties than thought bubbles and slanging matches.

Those whose livelihoods are at stake are entitled to know how the Coalition and Labor would deal with the issue in office after May 21. Effective policy plans would factor in cost-of-living pressures for workers, the capacity of businesses to pay their staff more, productivity improvements, maintaining consumer demand, the need to fill skill shortages with well-qualified immigrants in the absence of qualified Australian workers, and the need to avoid wage breakouts that would fuel inflation and necessitate faster and more interest rate increases. Before too long, such a trend would begin to destroy businesses, cost jobs, stall economic growth and erode the budget bottom line. After studying Australia’s wages breakouts in the 1970s and early 80s, the only sensible conclusion to draw is “never again”.

But as the Reserve Bank noted at a 2019 conference on the subject of low wages growth, lack of real wage growth dating as far back as 2011 had prompted some in the community to question whether they were benefiting from the nation’s economic success. Workers deserve the opportunity to do so. The problem has continued. In its most recent statement on monetary policy, the RBA noted “real wages have fallen significantly in advanced economies over the past year”. This had ­“reduced household purchasing power and contributed to sizeable declines in consumer confidence over recent months”. But some employers were paying more to attract staff.

As is his wont, Anthony Albanese has taken an emotional approach to what will be one of the most important economic issues of the next parliament. The Opposition Leader’s aims are to ensure nobody “will be left behind” and “nobody goes backwards”. But his plans for achieving them are a tangle of confusions. At a press conference on Tuesday, Mr Albanese was asked whether he would support “a wage hike of at least 5.1 per cent (the current inflation rate) to keep up with inflation”. His answer was unequivocal: “Absolutely.” Business groups, economists and the Prime Minister pounced on that promise, which would amount to a minimum pay rise of about $40 a week. Mr Albanese’s frontbenchers did not echo it. By Wednesday, he had a different story.

After Mr Morrison branded him a “loose unit on the economy” and warned a 5.1 per cent minimum wage rise would throw fuel on the fire of living costs and inflation, Mr Albanese declined to say if Labor would make a submission to the industrial umpire proposing a 5.1 per cent increase. “I think Fair Work Commission are probably clear about what our view is on those issues,” he said. Mr Albanese is clear about the wages outcome he wants but he also has promised that a Labor government would convene an employment summit to bring “unions and business together to talk about how we get wages moving, how we get business going, grow the economy in a way that the economy works for people, just not the other way around”. It is not clear how such a summit could improve productivity, which is the key to sustained wages growth.

On Wednesday, opposition industrial relations spokesman Tony Burke criticised the Morrison government for including a section headed “The importance of low-paid jobs” in its submission to the annual Fair Work Commission wage review. Mr Burke said the government was on the record trying to keep wages low and this was why “people are going backwards”. Mr Morrison would not be drawn on what an appropriate minimum wage increase would be. Allowing the commission to determine the rise independently was “wise” and it should not be subjected to political pressures, he said. That is appropriate. But voters are also entitled to hear Mr Morrison’s plan, in the new inflationary environment, about the extent to which the government believes wages should keep up with living costs and how it plans to boost productivity. The government has said little about workplace relations in the campaign.

With wages at the front and centre of many voters’ minds, business groups are entering the debate. In a new submission to the Fair Work Commission, the Australian Retailers Association backed a 3.2 per cent minimum wage increase, equivalent to a $24.70 a week rise. A higher increase would be unsustainable, it said. But its proposal is higher than the 3 per cent advocated by the Australian Chamber of Commerce and Industry and the 2.5 per cent proposed by the Australian Industry Group. The ACTU wants a 5.5 per cent rise.

The issue is one on which voters deserve to see a lead from both major parties.