(Image: Adobe)
(Image: Adobe)

It’s time for Australia’s lowest-paid workers to suffer real wage cuts, according to the business community and its cheerleader, the Australian Financial Review.

Major employer group the Australian Chamber of Commerce and Industry’s Andrew McKellar says the Fair Work Commission should not give minimum wage workers any higher an increase than 2% in this year’s annual award wage decision, and certainly not the federal government’s preferred increase to match inflation — because low-paid workers had been “overcompensated” over the past two years (yes, a premier business lobby group says our lowest paid workers are “overcompensated”).

Based on the Reserve Bank’s latest inflation forecasts, McKellar’s demand would subject our lowest paid to a 1.1% real wage cut next financial year. As for the “overcompensation”, over the past two years, the lowest-paid have received minimum wage rises of 5.2% and 5.75%, successively. In that time to December 2023, the consumer price index has increased ten points — and there are still two quarters to go in the current financial year, meaning they’ll still be out of pocket come July.

More broadly, workers are still deep in negative territory when it comes to real wages. The December 2023 quarter was the first quarter since early 2021 when annual private sector wages growth was higher than CPI growth. In the period since March 2021 — even including stronger wages growth last year and a small real wage rise in the December quarter — private sector workers have fallen five index points behind inflation. Over the decade to last December, wages growth and CPI rises have been almost exactly equal — meaning a full decade of wage stagnation.

You won’t find that kind of information in the pages of the Financial Review, strangely — only lurid explanations for why any wage rise would be an outrage. The AFR’s David Marin-Guzman recounted that the Australian Council of Trade Unions’ push for a 5% pay rise for the lowest paid, “which would flow on to more than 100 industry awards, would cement Australia as having one of the world’s highest minimum wages in nominal terms, second only to Luxembourg”.

Luxembourg! Cement! More than 100!

It echoed a line peddled by Ronald “google it, mate” Mizen earlier this week, when he warned that the Albanese government’s push for a minimum wage rise in line with inflation, an “increase of about 18% over three years”, would help “solidify Australia’s minimum wage as one of the highest in the OECD”. That horrific-sounding 18% would, again using the RBA’s inflation forecasts, amount to a real wage increase of… 2.7%, or a monster increase of less than 1% a year for our lowest paid. It’s enough to make you want to move to Luxembourg.

But the journalists at the AFR don’t appear to have a lot of sympathy for the low-paid. Last week, Marin-Guzman and resident neoliberal galah John Kehoe responded to the conclusion of the Fair Work Commission’s lengthy assessment of the value of aged care work — which bumped up its interim recommendation of a 15% pay rise to total increases of 20-23% across the sector — by quoting an economist warning the increase “could ratchet up wage pressures in other sectors”.

“The decision comes,” they wrote, “as stock markets sold off this week on firmer-than-expected US consumer and producer prices and investor bets that the ‘last mile’ of the inflation fight will be harder. ‘Reality is starting to bite,’ National Australia Bank interest rate strategist Ken Crompton said. ‘Pesky inflation is taking longer to come down, even as other data is showing slower economic growth.'”

Even RBA governor Michele Bullock wasn’t having this “greedy aged care workers will drive up inflation” stuff. “I don’t think it’s going to make a measurable difference,” she said when asked about it. “I don’t think anyone would begrudge aged care workers a rise.” Well, except at the AFR, where that response appeared under the headline “RBA to watch for ‘spillover’ from aged care pay rise”.

The AFR narrative, neatly encapsulated by Mizen this week, is that wages are rising without productivity growth, with “productivity slumping to 2016 levels”, as he put it. In fact gross value added per hour worked in the market sector has grown a total of 5.1 percentage points since March 2016, according to the December quarter national accounts. But why bandy figures around when we can defer to an independent and respected arbiter? A few weeks ago the Productivity Commission released its Annual Productivity Bulletin 2024.

What does the PC say? “Overall, labour productivity was 0.8% above its pre-pandemic average at the end of 2023-23, and 2.4% above its pre-pandemic average at the end of 2022-23 within the market sector. Looking beyond the 2022-23 annual data, the decline in labour productivity appears to have halted in the first quarter of the 2023-24 financial year” — a claim backed up by the second successive rise in GDP per hour worked in the December national accounts published since then.

As we reported at the time, the PC’s latest bulletin shreds the “productivity crisis” narrative and even argues that wages have failed to keep up with productivity growth. Only Michael Read at the AFR covered that report, and entirely ignored the PC’s conclusions about how much of the productivity crisis was simply not true. Judging by their writing since then, it appears to have escaped the attention of Mizen and Marin-Guzman entirely. Wouldn’t want the data to get in the way of the business narrative, would we?