The widening gap between profits and wages growth is damaging Australia’s social fabric but that’s not the only source of pain between workers and business, writes Malcolm King, a professional resume writer and social researcher in InDaily.
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?
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.