Weeo, weeo, weeo. The Pascometer is redlining on weak wages:
An unemployment milestone last week nearly sneaked past unremarked: In original terms, the Greater Sydney workforce of 2.88 million people recorded an unemployment rate that started with a three for October, the lowest it has been in 11 years.
So where are the strong wage rises the federal budget is relying on? Nowhere.
How about the jump in take-home pay that’s supposed to result from employers competing for scarce labour? It can’t be found.
Once upon a time, there used to be talk of a “capital strike” when businesses withheld new investment in the economy. We are now seeing a labour cost strike – businesses withholding wages increases despite a shortage of suitable labour.
The Greater Sydney unemployment rate in the Australian Bureau of Statistics detailed labour force figures released on Thursday was only one of several numbers that say the labour market has tightened markedly.
The participation rate of 67.5 per cent has only been beaten once – it touched 67.6 during the December high of casual employment last year. For females, the participation rate was a clear record of 62.5 per cent.
And it wasn’t just Sydney. In Melbourne and Victoria overall, the unemployment rate was 4.25 per cent, while NSW’s total was only a fraction higher at 4.27 per cent.
Together, our two most populous states account for more than half of the nation’s workforce – 56.8 per cent, but wages growth remains stuck in the slow lane.
I’d like a dollar from everyone who has written or continues to write that NAIRU (the non-accelerating inflation rate of unemployment) is “about 5 per cent”. Hitting NAIRU is supposed to see wages – and therefore inflation – take off. Neither are.
I’d like a dollar every time The Pascometer was a hypocrite. That said, given the mechanism’s superb record of ‘do the opposite’ calls, should we conclude that wages are about to explode or crash? My view is the latter, sadly, through 2019.
Anyone with eyes, or not on the take, knows where wage rises have gone. Into this:
- For years we have seen Dominos, Caltex, 7-Eleven, Woolworths and many other fast food franchises busted for rorting migrant labour.
- The issue culminated in 2016 when the Senate Education and Employment References Committee released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documented systemic abuses of Australia’s temporary visa system for foreign workers.
- Mid last year, ABC’s 7.30 Report ran a disturbing expose on the modern day slavery occurring across Australia.
- Meanwhile, Fair Work Ombudsman (FWO), Natalie James, told Fairfax in August last year that people on visas continue to be exploited at an alarming rate, particularly those with limited English-language skills. It was also revealed that foreign workers are involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers.
- Then The ABC reported that Australia’s horticulture industry is at the centre of yet another migrant slave scandal, according to an Australian Parliamentary Inquiry into the issue.
- The same Parliamentary Inquiry was told by an undercover Malaysian journalist that foreign workers in Victoria were “brainwashed” and trapped in debt to keep them on farms.
- A recent UNSW Sydney and UTS survey painted the most damning picture of all, reporting that wages theft is endemic among international students, backpackers and other temporary migrants.
- A few months ago, Fair Work warned that most of Western Sydney had become a virtual special economic zone in which two-thirds of businesses were underpaying workers, with the worst offenders being high-migrant areas.
- Dr Bob Birrell from the Australian Population Research Institute latest report, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates. These results accord with a recent survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife.
- The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants report, revealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%).
- ABC Radio recently highlighted the absurdity of Australia’s ‘skilled’ migration program in which skilled migrants have grown increasingly frustrated at not being able to gain work in Australia despite leaving their homelands to fill so-called ‘skills shortages’. As a result, they are now demanding that taxpayers provide government-sponsored internships to help skilled migrants gain local experience, and a chance to work in their chosen field.
- In early 2018 the senate launched the”The operation and effectiveness of the Franchising Code of Conduct” owing in part to systematic abuse of migrant labour.
- Then there is new research from the University of Sydney documenting the complete corruption of the temporary visas system, and arguing that Australia running a “de-facto low-skilled immigration policy” (also discussed here at the ABC).
- In late June the government released new laws to combat modern slavery which, bizarrely, imposed zero punishment for enslaving coolies.
- Over the past few months we’ve witnessed widespread visa rorting across cafes and restaurants, including among high end establishments like the Rockpool Group.
- Alan Fels, head of the Migrant Workers Taskforce, revealed that international students are systematically exploited particularly by bosses of the same ethnicity.
The mass immigration economy does not do wages growth. It shrinks wages via a permanent supply shock that has destroyed industrial relations ensuring everybody is now either under-employed or terrified of it:
It is one of the those wonders of the universe that The Pascometer hasn’t imploded in a puff of illogic owing to his volte face on this issue. In its former life as Michael Pascoe, the mechanism knew exactly what was going on. Here’s Pascoe in March 2007:
Immigration Minister Kevin Andrews is reportedly taking to Cabinet next month [a submission] increasing the permanent migration program from the present 140,000 a year to “at least 180,000”…
The surge of guest workers and skilled migration has already kept a lid on wages. As we’ve previously reported, more than half the growth of 200,000 full time jobs last year went to guest workers and targeted skills migrants.
With no apparent cap on 457 visas, plus the Kevin Andrews’s migration submission, it will continue to do so.
Here’s Pascoe in July 2007:
From Brisbane to Perth and all major centres in between, Australian cities are groaning under inadequate infrastructure, choked roads, unaffordable housing, failing public transport.
…the influx remains beyond the planning and delivery capabilities of hapless state governments, never mind a federal government that underfunds the states.
The immigration surge plays a major role in keeping wages inflation under control and, therefore, interest rates down — but it’s putting plenty of strain on other parts of the system.
Here’s Pascoe in August 2007:
Crucial skills shortages in a number of areas means the idea of a flexible and fast temporary visa system has considerable merit, but the badly-administered and demonstrably slip-shod 457 scheme presently run by Kevin Andrews doesn’t.
And there are broader issues yet to be debated about the impact of 300,000 migrants this year on the labor market and economy, the role such an unprecedented intake will play in keeping down inflation by keeping down wages.
And Here’s Pascoe in July 2008:
457s are now being processed faster than ever… As the Minister correctly notes, “the increase in the subclass 457 visa grants highlighted the importance of the program in delivering skilled labour to employers across a wide range of professions and industries.”
It also helps reduce inflation by keeping down wages in at least some select industries.
And, with the economy coming off the boil, the matching of 457 visa applicants with areas of particular skills shortages is somewhat less than laser sharp, if only because 47 per cent of those 110, 570 visas were for “secondary grants”, i.e. dependents, who themselves have a very high workforce participation rate in whatever field they fancy…
It’s not so good for workers in the lower half of the pay spectrum who lose bargaining power when positions are filled by 457 visa holders…
These days, The Pascometer just can’t get enough mass immigration to crush-load cities and destroy wage growth, constantly argues for more and higher levels of it, despite being a Labor guy, writing at a Labor publication, about labour issues.
Nothing new here, alas. Add The Pascometer to the growing throng of Fake Left uber-wankers pretending to care about workers.
Weeo, weeoo, weeoo.
