This is the first in a three-part mini-symposium on Wages, Unemployment and Underemployment presented by The Conversation and the Academy of the Social Sciences in Australia.
The long debate over the causes of wage stagnation took an unexpected turn last week, when Finance Minister Matthias Cormann described (downward) flexibility in the rate of wage growth as “a deliberate design feature of our economic architecture”.
Cormann had said policies aimed at pushing wages up could cause “massive spikes in unemployment”.
The ease with which Reynolds was trapped into at first rejecting and then accepting what her ministerial colleague had said flowed from the fact that Cormann had broken one of the standing conventions of politics in Australia, and for that matter, the English-speaking world.
For more than forty years, both the architecture of labour market regulation and the discretionary choices of governments have been designed with the precise objective of holding wages down.
These policies have been quite successful, as can be seen from the graph.
However, at least until recently, there has been bipartisan agreement on at least one aspect of them – that no one should mention their role in holding back wages.
- ^ a deliberate design feature of our economic architecture (www.magic1059.com.au)
- ^ 16 seconds after it had been rejected (www.news.com.au)
- ^ ABS Australian Accounts, seasonally adjusted (www.abs.gov.au)
- ^ often for less than the minimum wage (theconversation.com)
- ^ Hungry Mile (theconversation.com)
- ^ Bretton Woods (en.wikipedia.org)
- ^ real wage overhang (www.rba.gov.au)
- ^ banning secondary boycotts (www.legislation.gov.au)
- ^ Workplace Relations Act 1996 (www.legislation.gov.au)
- ^ WorkChoices (en.wikipedia.org)
- ^ Explainer: what are the ABCC and Registered Organisations bills? (theconversation.com)
- ^ broken the law (www.afr.com)
- ^ they are supposed to uphold (www.abc.net.au)
- ^ to abolish any general right to strike (www.theguardian.com)
- ^ used the process to cut penalty rates (www.liberal.org.au)
- ^ royal commissions (www.royalcommission.gov.au)
- ^ worked with the major waterfront employer, Patricks (www.theage.com.au)
- ^ wages explosion (ministers.jobs.gov.au)
- ^ ABS Wage Price Index (www.abs.gov.au)
- ^ Academy of the Social Sciences in Australia (www.assa.edu.au)
Authors: John Quiggin, Professor, School of Economics, The University of Queensland