The Ambassador Comes to Call

When my wife and I were students at Regent University working on our doctorates we often had gatherings at our large Victorian home in South Norfolk.  I’ll never forget when a man from Africa attend...

Dr. Robert Owens - avatar Dr. Robert Owens

View from The Hill: Joyce could be facing waves at a judicial inquiry after the election

It’s hard to believe Barnaby Joyce really wants to lead the Nationals again. Of course everyone knows he does, desperately, but his unhinged ABC interview with Patricia Karvelas on Monday showed...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Australia's 'watergate': here's what taxpayers need to know about water buybacks

The federal government committed to reducing water extraction from the Murray-Darling Basin.ShutterstockIn 2017, the then agriculture minister, Barnaby Joyce, signed off on an A$80 million purchase of...

Lin Crase, Professor of Economics and Head of School, University of South Australia - avatar Lin Crase, Professor of Economics and Head of School, University of South Australia

Ethnic media are essential for new migrants and should be better funded

An annual indexation freeze in funding introduced by the Liberal government in 2013 has cost the sector almost A$1 million.ShutterstockThe fact that the community ethnic and multicultural broadcasting...

John Budarick, Lecturer in Media, University of Adelaide - avatar John Budarick, Lecturer in Media, University of Adelaide

Rift between NZ government and aid agency over naming of nurse captured by ISIS

The ICRC may have decided to release the name of a New Zealand nurse captured in Syria because ISIS has been defeated in its strongholds.Ahmed Mardnli/EPA, CC BY-NDLast week’s revelation that a ...

Alexander Gillespie, Professor of Law, University of Waikato - avatar Alexander Gillespie, Professor of Law, University of Waikato

Media Files: Investigative journalist Adele Ferguson on the 'disappointing' banking royal commission and how she works with whistleblowers

Today on Media Files, it’s journalism versus the big banks. We’re hearing from Adele Ferguson, the celebrated journalist who many credit as the driving force behind the banking royal commi...

Andrew Dodd, Director of the Centre for Advancing Journalism, University of Melbourne - avatar Andrew Dodd, Director of the Centre for Advancing Journalism, University of Melbourne

FUCT gets day in court as SCOTUS considers dropping slippery moral standard when granting trademarks

When’s a brand too scandalous to trademark? That’s a question the Supreme Court will soon decide in a case that tests the constitutional limits of free speech. I attended the oral argument...

Megan M Carpenter, Dean, University of New Hampshire - avatar Megan M Carpenter, Dean, University of New Hampshire

'I'm not a traitor, you are!' Political argument from the Founding Fathers to today's partisans

How partisans argue tells a lot about how the public sees democracyShutterstockPresident Trump is working with the Russians to enrich himself. The Republican Party is shielding him from accountability...

Jeffrey Selinger, Associate Professor of Government, Bowdoin College - avatar Jeffrey Selinger, Associate Professor of Government, Bowdoin College

Why federal student aid should be restored for people in prison

Research shows prison education lessens the chances that inmates will return to prison after their release.Elaine Thompson/APCongress is thinking of lifting a longstanding ban on federal student aid f...

Andrea Cantora, Associate Professor of Criminal Justice, University of Baltimore - avatar Andrea Cantora, Associate Professor of Criminal Justice, University of Baltimore

A quest to reconstruct Baltimore's American Indian 'reservation'

Members of East Baltimore Church of God, which was founded by Lumbee Indians, and was once located in the heart of 'the reservation,' in the 1700 block of E. Baltimore Street.Photo courtesy of Rev. Ro...

Ashley Minner, Lecturer, Folklorist, University of Maryland, Baltimore County - avatar Ashley Minner, Lecturer, Folklorist, University of Maryland, Baltimore County

What Leonardo's depiction of Virgin Mary and Jesus tells us about his religious beliefs

Leonardo da Vinci's Virgin of the Rocks.National Gallery LondonOn the 500th anniversary of Leonardo da Vinci’s death, Italian academic Francesco Caglioti’s recent claim that a sculpture he...

Diane Apostolos-Cappadona, Haub Director of Catholic Studies, Georgetown University - avatar Diane Apostolos-Cappadona, Haub Director of Catholic Studies, Georgetown University

Understanding the periodic table through the lens of the volatile Group I metals

Sodium metal explodes on contact with water. Albert Russ/Shutterstock.comThe news broke that a railroad car, loaded with pure sodium, had just derailed and was spilling its contents. A television repo...

Erwin Boschmann, Professor Emeritus of Chemistry & Chemical Biology, IUPUI - avatar Erwin Boschmann, Professor Emeritus of Chemistry & Chemical Biology, IUPUI

Japan’s next emperor is a modern, multilingual environmentalist

For the first time in 217 years, a Japanese emperor will cede his place on the imperial throne. On April 30, Japan’s ailing 85-year-old Emperor Akihito will abdicate and be replaced the followin...

Constantine Nomikos Vaporis, Professor of History, University of Maryland, Baltimore County - avatar Constantine Nomikos Vaporis, Professor of History, University of Maryland, Baltimore County

In India, WhatsApp is a weapon of antisocial hatred

Smartphones are a conduit for misinformation about the Indian election.AP Photo/Manish SwarupA general election in India, the world’s most populous democracy, seems a theoretical impossibility. ...

Rohit Chopra, Associate Professor of Communication, Santa Clara University - avatar Rohit Chopra, Associate Professor of Communication, Santa Clara University

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”.

It was a position that was endorsed in a flurry of confusion 16 seconds after it had been rejected by Defence Industry Minister Linda Reynolds.

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.

ABS Australian Accounts, seasonally adjusted Instead, the decline in the wage share of national income has been variously blamed on technology immigration imports from China and, more recently, the end of the mining boom. None of these explanations stand up to scrutiny. The idea that technology is driving the wage share down is perhaps the most popular. But technological change has been continuous, if uneven, since the beginning of the Industrial Revolution in the 18th century. Most of the time, workers have shared in the resulting productivity gains. There have however, been a number of exceptional periods in which workers have been harmed. They have been times when the balance of power had favoured employers. At those unusual times, any kind of disruption, whether caused by new technology or not, has had the potential to enable employers to break working conditions and cut wages. Right now, for example, there is no necessary reason for the ability to do business over the Internet to harm workers. In many ways it empowers workers by reducing the information advantages of big employers. But in an environment where unions are weak and working conditions are vulnerable to erosion, the outcome is firms like Airtasker, where workers bid against each other to perform outsourced tasks, often for less than the minimum wage. There is nothing new about this kind of working arrangement. It could be seen outside the wharves on Sydney’s “Hungry Mile” in the 1930s, where workers went from wharf to wharf each day hoping for work, or today on street corners in the United States, where (often undocumented) construction workers gather in the mornings hoping to be picked for work. But if technology isn’t to blame, what is? The real story begins in the early 1970s, when there was an upsurge in inflation associated with the breakdown of the post-war Bretton Woods system of fixed exchange rates , and soaring prices in commodity markets including that for oil. The result was a “wage-price spiral” as both wages and prices rose at unexpected annual rates of more than 10%. In a nation with a history of strong trade unions, decades of full employment, and the boundless faith in the future forged by the 1960s, wages grew faster than prices as both spiralled upwards. By the time rising unemployment began to bite, and inflation slowed down, the wage share of national income had risen to an unprecedented 62%. Reining in this “real wage overhang” became the central preoccupation of macroeconomic policy throughout the 1970s and 1980s. This made sense at the time. But, as in other fields, ideas formed in the 1970s and 1980s continued to dominate the thinking of policymakers long after they had either been proven to be failures or rendered obsolete by changing circumstances, as was the case with policies designed to hold back wages. The policies had several elements. There were a series of changes in industrial relations law, most of which have attacked unions and weakened the bargaining power of labour. The Fraser government introduced Sections 45D and 45E of the Trade Practices Act banning secondary boycotts, that is, action in solidarity with other workers. Fraser also created the Industrial Relations Bureau, the first of a series of industrial “police forces”. On its election in 1996, the Howard government introduced the Workplace Relations Act 1996 which extended scope for non-union agreements. After winning a Senate majority in 2004, Howard introduced WorkChoices which limited the scope of collective bargaining, and wound back protections against dismissal. Read more: Explainer: what are the ABCC and Registered Organisations bills? The Industrial Relations Bureau maintained at least a pretence of impartiality. By contrast, the organisations created by the Abbott and Turnbull governments (the Registered Organisations Commission and Australian Building and Construction Commission) have been so nakedly anti-union that they have repeatedly broken the law they are supposed to uphold. Labor governments have wound back some of the most extreme measures, but have not changed the general direction of policy. Even measures that appeared superficially favourable to workers turned out differently. For example, in 1993 the Keating government introduced the concept of “protected industrial action”. It was some time before it became apparent that the result was to abolish any general right to strike, something that exists in almost every other democratic government. As Minister for Workplace Relations, Bill Shorten introduced measures that were pitched as protecting penalty rates through a review process undertaken by the Fair Work Commission. A few years later, in a highly politicised process, the Commission used the process to cut penalty rates. Coalition governments have also used the power of the state directly against unions. Notable examples include the string of royal commissions created by the Abbott government and the use, in 1998, of ex-military strikebreakers to break the Maritime Union of Australia. Their training and deployment was facilitated by a government consultant who worked with the major waterfront employer, Patricks. orchestrating the offshore training of the replacement workforce through the actions of consultant Stephen Webster and other shadowy ex-military figures. Finally, macroeconomic management has operated on the basis that any increase in wages is a danger signal requiring a tightening of fiscal and monetary policy. A notable example, was the warning by then Employment Minister Eric Abetz in January 2014 months after taking office that Australia faced a “wages explosion”. ABS Wage Price Index Far from “exploding”, wage growth slid and hasn’t recovered. More striking than his failed prediction, was Abetz’ assumption, taken for granted in policy debate, that any substantial increase in wages would be disastrous. It is only in the last few years that this assumption, inherited from last century, have been challenged. The Reserve Bank in particular has become an advocate for higher wage growth. Yet as Cormann’s incautious outbreak of truthtelling has shown, the view has yet to percolate through to Australia’s elites. The Academy of the Social Sciences in Australia is one of Australia’s four learned academies. The ASSA coordinates the promotion of research, teaching and advice in the social sciences, promotes scholarly cooperation across disciplines, comments on national needs and priorities in the social sciences, and provides advice to government on issues of national importance.

Authors: The Conversation

Read more http://theconversation.com/ultra-low-wage-growth-isnt-accidental-it-is-the-intended-outcome-of-government-policies-113357