Wry & Dry

Wages growth up a little (unless you work for Lend Lease)

W&D gets a pay increase each year equal to about CPI (the rate of inflation).  It's not enough to keep Mrs W&D happy, as the price of Ferragamos [1] goes up by more than CPI.

But the average private-sector worker in Australia did a little better, with a wage increase of 1.9% in the year to September.  The figure is the lowest since the boffins at the Bureau of Statistics (the fine folk who brought you that magnificent market research piece called The Census) started the series in 1998.  

21 Wages growthOf course, readers will know that the important statistic is not wages growth but real wages growth.  That is, the change in the purchasing power of wages: wages growth minus CPI.

The good news is that real wage growth has continued to rise.  Notwithstanding the recent bleating of some politicians.  

21 wages growth indexed 2

So, if real wages are rising strongly, why are some people whingeing?

W&D sees two reasons:

Firstly, some politicians want to make erroneous comparisons with the US; where real wages have flat-lined.  The problem in the US, as W&D pointed out some months ago, is not only have real average wages been flat since the GFC but:

  • US corporate profits have boomed (i.e. "I haven't had a share of the growing pie")
  • Wall Street compensation has resumed its ski-jump trajectory (i.e. "I took the pain of the GFC, why didn't those guys?")
  • infrastructure in the US is rapidly decaying (i.e. "I'm actually worse off") 

Secondly, there is justifiable anger in Australia at the wage packets of large company directors and senior executives.  The profits of Australian companies have been somewhat meagre for 15 years.  And yet the senior executives have been lining their pockets.  And so there is a sense of 'unfairness'.

W&D hastens to add that there are lies, damned lies and statistics [2].  Consider this: if the population is growing and young (and therefore relatively lower paid) workers are entering the workforce and are more than replacing, numerically, retiring (and higher paid) workers, then logic suggests that all other things being equal, the average wage level should go down.

But, as W&D notes the modest average increase in wages, some people out there have just won a 20% p.a. pay increase over 4 years (plus 10 days paid family violence leave, 5 days paid study leave, 3 days compassionate leave, etc) from their employer.  So what, W&D hears some readers shout.  It's a private company, and it can pay its workers whatever it wants.

Err, no.  This employer is in an oligopoly, a sort of cartel. And, like the now dying motor-vehicle manufacturing industry in Australia, where the costs of featherbedding and wanton productivity were readily passed on the buyer resulting in some of the most expensively produced cars in the world, so too these outrageous costs will be passed onto the buyer.  And in many cases the buyer is we-the-taxpayer.  

The employer is Lend Lease.  The employees are members of the CFMEU, the militant construction industry. 

So with the massive rise in infrastructure projects, W&D isn't sure that there will be an efficacious outcome for the billions spent.

[1]  A brand of ladies footwear, made in Italy, but, fittingly, with a price above rubies.  That is not to say that W&D sits at the city gate.

[2]  The term was popularised in United States by Mark Twain (among others), who attributed it to the British Prime Minister Benjamin Disraeli: "There are three kinds of lies: lies, damned lies, and statistics."