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When business kicks away the ladder of opportunity


The widening gap between profits and wages growth is damaging Australia’s social fabric, writes Malcolm King, but that’s not the only source of pain between workers and business.

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Mark Twain wrote: “When the rich rob the poor, it’s called business. When the poor fight back, it’s called violence.”

The trenchant refusal of employers to pass on profits as wages is doing violence to the Australian and SA economies, while rending the social fabric.

According to the Centre for Future Work, back in 1975, the ‘labour share’ of GDP had climbed to 58 per cent. Now wages, salaries and other payments to workers, including superannuation, have fallen to 47 per cent of GDP.

In the recent reporting season to June, profits hit a record $335.4 billion, up 10.1 per cent on the previous year. Wages and salaries, according to the ABS, rose by just 2.1 per cent. The lion’s share of profit went to shareholders.

The relationship between wages and unemployment has fundamentally changed for the worse. RBA Governor Philip Lowe said recently wage increases of around 2 per cent are now the norm, rather than the 3-4 per cent mark that employees used to get.

People have taken out mortgages in the belief their incomes would grow at around 3 per cent. Many now have no capacity to fund rising interest rates, especially with little savings to fall back on.

Employers’ complaints haven’t changed much since Charles Dickens’ times: taxes are too high, workers have too few skills, there’s too much red tape, etc, etc.

For 40 years, governments of all persuasions have driven down taxes, thrown billions of dollars at the university and the vocational education sectors and initiated a major Productivity Commission report to slash red tape. But still, the complaints come.

The problem isn’t the blockers to economic advancement but business leaders and their whining lobbyists such as the Business Council of Australia, the Australian Chamber of Commerce and Industry and the Australian Industry Group, who live off their members’ fees.

It’s as if the better angels of the business community have left town, replaced by Scrooge with a cloven hoof and a pointy tail. Since when does greed trump a fair day’s work for a fair day’s pay?

When anyone calls for change based on fairness and equity, business commentators immediately equate such change with Lenin riding around St Petersburg on a tank on the eve of the Russian revolution.

Wage stagnation creates some ironic knock-on effects. In Adelaide’s retail sector, fierce competition for tight household dollars has forced prices down, thereby killing off any chance of pay rises.

Some of the blame can be attributed to online shopping. Yet nationally, only 5.6 per cent of purchases were made online in May 2018, although this figure is rising.

In the year to December 2017, SA workers received pay rises of an average 1.9 per cent, while consumer prices rose by 2.3 per cent. Wages are lagging prices.

Last year, when the Fair Work Commission handed down a $22.20 per week increase to 2.3 million Australians, (which raised the minimum wage to $694.90 a week), there were howls of protest from employer groups – none louder than Business SA.

“Coupled with significant underemployment, youth unemployment, and the second lowest labour force participation rates in Australia,” said Business SA, “today’s decision by the Fair Work Commission to increase the minimum wage by 3.3 per cent is a significant disincentive to South Australian employers taking on more staff.”

The Australian Chamber of Commerce and Industry (Business SA’s parent organisation), wanted to give the battlers $8.10 a week. While SA has a raft of the most serious economic issues, grossly inflated wages is not one of them. The Fair Work Commission reset wages to what they historically had been.

The real problem is an appalling lack of proprietorial responsibility for staff welfare and in some cases, the law.

Another key factor to wage stagnation was the deregulation of the labour market in the 1980s and 1990s, which saw a huge shift of workers to casual employment. The number of casual jobs increased more than 70 per cent in the 15 years to 1998.

That figure hides a generational sting in the tail. Among young workers, the rate of casual employment has grown from 34 per cent to more than 50 per cent.

The plight of young people is further compounded by allegations that numerous Australian businesses, particularly in the hospitality and service sector, have been paying below award wages.

We are witnessing the atomisation of society and economic repression of the individual.

Young people watched as generations before them were showered with one-off seniors’ payments, indexed pensions linked to average male earnings, tax-exemptions on family homes and superannuation tax breaks, while house prices skyrocketed.

Consider also evidence from the banking royal commission, that the major banks and various insurance companies ripped off billions of dollars in fees from their clients.

Large sections of the business community have lost their moral compass and now treat the public as carrion, to be pecked and shredded at leisure.

In a land where Prime Ministers pass more frequently than carousel horses at the Royal Show and where the two main political parties are devoid of ideology, middle and working class wage earners should demand more for their labour. Their salaries, in some cases, are literally being pilfered.

When anyone calls for change based on fairness and equity, business commentators immediately equate such change with Lenin riding around St Petersburg on a tank on the eve of the Russian revolution.

That’s laughable. We are witnessing the atomisation of society and economic repression of the individual. It’s happening daily in numerous ways. Some by stealth, others by government decree. But the results are the same: flat or declining wages and insecure employment.

When wage earners and the underemployed fight back, there’s only one word to call it – restitution.

Malcolm King is a professional writer who splits his time between Canberra and Adelaide. He is a regular InDaily columnist.


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