This is another pointless debate, as usual.
The Reserve Bank governor has contradicted Labor’s claims that wages can continue to rise without productivity gains, as the Albanese government pushes for an above-inflation increase for 3 million workers on minimum rates this year.
Labor’s submission to the Fair Work Commission’s annual wage review calls for an “economically sustainable” lift to the minimum hourly rate of $24.10. It is the first time in four years the government has asked for a real increase to the minimum wage.
The mass immigration, labour market expansion growth model suppresses wages via the permanent cheap firing labour supply shock.
It also suppresses productivity via capital shallowing.
This means there won’t be any decent private sector wage rises, punctuated by forced increases when the remains of the centralized wage-fixing system steps in.
These will be small because the underlying private sector wage suppression is so strong. But, equally, they will not cause inflation because so many of the Aussie oligopolies that benefit from a growing population will have top-line growth from a larger market to offset any margin decline while weak wages suppress demand and pricing power.
Meanwhile, successive generations of Australians will enjoy falling living standards via the externalities that nobody counts: crush loading of all public services and infrastructure leading to declining transport, health, and taxation outcomes. Plus, an endless housing crisis that worsens marginally every cycle. And the relentless hollowing out of the external sector.
This is how this system works. It is a tacit agreement between the government and the corporate sector to keep profits and GDP growing at a weak rate that enriches individuals in both, while 99% of Australians go backwards at a pace that is difficult for them to discern.
It will never do productivity, so it will never do faster wage gains and rising living standards.
It is the ultimate in egalitarian mediocrity and is sustainable to the extent that global markets will fund the current account deficit, and there is no call for anybody to defend the country.
In short, it is in trouble as Cold War 2.0 pressures grow.
