The latest wages data, election strategy and #changetherules

New wages data and what it might mean

On Wednesday (November 14th) the Australian Bureau of Statistics (ABS) released its quarterly update on the Wage Price Index . This is one of several means of “measuring” changes in wages. The Reserve Bank considers this and other measures when working out what it will do regarding interest rates. The data triggered a cautious (usually), positive vibe across mainstream media and economic commentators.

What is happening (or not happening) with wages also affects the campaigns for the national elections, due by May next year, and the considerations of the Fair Work Commission (FWC) in its Annual Wage Review (AWR), now under way.

Possibly the only hope left for the survival of the LNP government is that, over the next few months, it wins the “debate” on the state of the economy. The government and the employer organizations are seeking to convince a majority that that the economy is going well on the key economic indicators, and the government is doing well on that front.

There are at least 2 critical weak points in this story. First, what happens if the economic crisis starts to takes visible shape before then? Second, when will wages and salaries start to rise and how much of a rise will be tolerable enough to convince a majority of voters that the government is managing the economy to include “something” for them?

Modest wage and salary increases will be sold to the public that a) the government and its neoliberal agenda is still working on the “things that matter”, b) that “the market works”, and c) there is absolutely no need for any significant change to the repressive, anti-worker Fair Work Act 2009 (FWA09).

Of course, the managers of the “system” – the Reserve Bank, the Treasury, and the government, and employer organizations – do want an uplift in wages, as long as it does not go too far. They know that, right now, the ACTU’s #changetherules campaign is steadily winning the public debate about inequality, poverty and wages suppression.

So, what did Wednesday’s new data really show?

A closer look shows how serious the underlying problem is … from the point of view of workers.

We should also keep in mind that, like other measures of wage movements, the reported WPI data includes executive salaries (not including bonuses). Executive salaries are much higher and are increasing at a faster pace than the real wages of real workers.

Thus, the reported average is higher than the average for real workers. For them the situation is worse than it appears in the reported data, although just how much is difficult to quantify. Further, the ABS’ treatment of changes in the quality of work makes the real WPI lower again for real workers.

Also, this data is not broken down for men and women.

My first snapshot

This chart shows the WPI increase over 5 different time periods. These are the trend figures; that is, the most reliable.

The first column shows the average of the percentage quarterly increases since this data was started in 1997 through to Wednesday’s release. 1997 is the first full year of the Howard government.

The next and following columns, starting in Dec’06 show the average over consecutive 3 year periods. 2006 is the last full year of the Howard government.

The Rudd Labor government, under Julia Gillard’s leadership as Minister, introduced the FWA09 in 2009. The FWA09 is covered basically by the last 3 columns.

The trend is obvious.

My second snapshot

In this second chart we can see what is happening in 3 selected industries: mining, manufacturing and construction.

This chart takes the financial year data (quarterly is not supplied) and is “original;”, that is, not trend. As far as I can tell there is not a big difference in the “original” and “trend” data for the WPI. (Charts can be provided for other industries, on request.)

Again, the trend is obviously downwards.

Wages, Annual Wage Review and the #changetherules campaign

The AWR 2018-19 is now under way and pretty soon the ACTU will probably announce its claim, if last year’s practice is anything to go by.

The slight uptick in the WPI, as reported, is generally attributed to the last year’s 3.5% AWR increase that started on July 1st this year. But that 3.5% was less than half what the ACTU was seeking and, what is necessary to lift the minimum wage above the poverty line. (Enterprise bargaining increases were not decisive.)

Wednesday’s WPI data confirm the validity of the ACTU’s “living wage” objective. However, will the ACTU, and its member unions, seriously mobilise its growing #changetherules movement to struggle for that objective with public actions and demonstrations? Or just leave it to its advocates?

Will the ALP’s election strategy affect the ACTU approach and, if so, how?