It says something about the shallowness of public policy debate in Australia that much of the commentariat and most of the business community is still obsessing about the need for economic reform (company tax cuts, industrial relations deregulation, cutting red tape etc) even as evidence grows that wage stagnation is the key economic and political challenge. It has taken the governor of the Reserve Bank saying wage stagnation is a major problem and a roadblock to economic reform to get many commentators seriously interested in it — and only then to argue that the easiest way to increase wages is to give employers greater powers to slash wages.

Well, more evidence emerged today, as economic thinktank CEDA holds its annual shindig in Canberra on “shifting the dial” on economic reform. It also released polling from a 3000-strong sample on community perceptions around reform, and the results — summarised in this graph — are utterly dire. 

This is a picture of the failure of Australia’s governing class — politicians, bureaucrats, business people and the media — to ensure that citizens believe the economic and political systems work for them, not for the wealthy and powerful. People think big business, the wealthy and foreigners have got most of the benefits of economic reform, while they, and ordinary workers, have got few of them. That 84% of people say they have gained little or nothing from economic growth is remarkable — they’re certainly wrong, yes, but the result conveys the disenchantment about the entire Reform narrative.

And nothing quite says “the system isn’t working for you” like little or no real wages growth while executives and corporations make a motza.

Overseas, where wage stagnation has been deeper, or longer, or both, the debate is more advanced. There is a lot of work being done by academic economists on how the power of corporations (which under thirty years of neoliberalism has dramatically increased) is working to hold down wages, and how maybe our simple supply-and-demand-based model of the labour market is wrong. Some are arguing that the basic relationship between unemployment and wages growth has completely broken down, and the gig economy is to blame. The ACTU, which has been campaigning against the broader phenomenon of casualisation for years, would likely agree.

It’s a little early to say that the laws of supply and demand for workers have entirely broken down — the problem might be how we measure that supply and demand. One issue is underemployment — something the Reserve Bank has been onto for a while, with its stress that there remains unused capacity in the labour market despite strong jobs growth. Indeed, ABS jobs data shows that underemployment in Australia has been rising in recent years — with the gap between the unemployment rate and underemployment widening from about 2014 to, now, around three percentage points. That may well be the gig economy in action. The other issue, of course, is that we’ve taken away from workers one of the primary means of turning labour market pressures into higher wages — unions and striking.

Even CEDA, despite its polling, is offering a “business as usual” agenda, with a procession of business figures, government ministers and former bureaucrats, while Bill Shorten (and Tim Gartrell) effectively represent progressive politics. Much of the commentariat — especially in reactionary redoubts like The Australian, The Financial Review and the Business Council branch of the Liberal Party — is stuck in a “the beatings will continue until morale improves” approach to the problem of why the community won’t support their beloved Reform. But the “dial” that needs to be shifted is the power balance between corporations and citizens, workers and consumers, not in some magical new way of presenting and selling Reform that people see as just more of the same bad deal they’re getting now. And the way to measure that shift is in corporations being forced to pay their workers substantially more. The problem is, we have a government that is working hard to shift it the other way.