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Federal Election 2019: A primer on policy concerning wages and unemployment


Lemia Bickalo

By

May 6th, 2019


How will each of the parties deal with weak economic growth and stagnant wages? Find out before heading to the polls in this quick breakdown with Lemia Bickalo.


The current economic climate

The current conundrum facing the Australian economy is strong jobs growth but weak economic growth, labelled as a key concern by the RBA.

Australia’s unemployment rate has edged back up closer to 5 per cent, with wages remaining stagnant despite strong job creation. The slight rise in unemployment can be attributed to more people looking for work and population growth.[1]

The disparity between the strong growth in jobs and the slow growing economy, can be resolved by either GDP growing or by unemployment increasing to align with domestic economic activity.[2]

Given the falling prices in the housing market, wages are likely to remain stagnant and the wealth of households will decrease, limiting spending.2 Unemployment is therefore expected to increase.

If unemployment trends up, interest rates could be cut. At the most recent board meeting, the RBA expressed that it would consider cutting rates if the unemployment rate rose and inflation remained below 2 per cent.

Liberals

Australia has experienced slow wage growth with nominal wages only having grown at 2% since 2015. The government has argued that economic growth and the nation’s low unemployment rate will bring about a natural reversal to stagnant wage growth.

The Government holds a positive outlook for the domestic economy and accordingly its budget predicts solid employment growth as well as a pick up in wages, with unemployment remaining at 5 per cent.

The Liberal Party’s goal for a ‘stronger economy’ means they plan to deliver 1.25 million jobs over the next five years.

The Morrison Government will invest $525 million over five years in the vocational education and training (VET) sector to ‘better equip Australians with the skills they need for today and tomorrow’.[3]

The current Government will also expand its Youth Jobs PaTH Program to pilot up to 10 industry-led job pathway programs to better target the training and internship experiences for young people.

Boosting regional employment is also on the agenda with the introduction of a new trial wage subsidy program to support eligible new Australian apprentices located in regional areas facing skills shortages. Under the subsidy, eligible employers will be able to receive payments based on the apprentice’s relevant award wage rates.

Labor

If elected, Labor plans to transform the current minimum wage into a living wage by amending the Fair Work Act to instruct the Fair Work Commission to lift the minimum wage above the “unfair” rate of $18.93 an hour before tax.[4] This would give 1.2 million low paid workers a pay rise, many of which are youth. There are fears that higher wages will increase the youth unemployment rate. However, according to the Fair Work Commission moderate and regular increases to the minimum wage doesn’t not cause significant job losses.[5]

Labor’s other polices include[6]:

  • Penalty rates – reversing the Sunday and public penalty rate cuts for retail and hospitality workers
  • Equal pay – enshrining equal gender pay in the Fair Work Act
  • Same Job, Same Pay policy – preventing labour hire which involves renting out workers usually for lower pay, undercutting wages.
  • Permanent Casuals – ending the use of ‘permanent casuals’ by introducing an objective definition of casual. Labor will also allow workers to request permanent part-time or full-time employment after 12 months of regular hours with the same employer
  • Gig economy – workers will be paid properly and not used to undermine wages

Labor also plans to boost local jobs through its ‘Local Projects, Local Jobs’ plan which will invest in local infrastructure projects including road, rail and port upgrades and will make sure that Commonwealth investment results in local jobs.

Greens

The Greens endorse a harder stance on changing industrial relation laws.

On the minimum wage, the Greens demand an increase to the ‘minimum wage to a living wage of at least 60% of the adult median wage so workers can afford to meet their basic needs’.[7]

On industrial action, the Greens support abolishing the ABCC and Registered Trade Organisation Commission, ‘restoring the right to strike, bargaining at whatever level workers consider appropriate, not just within an enterprise’.7

The Greens also plan to establish an independent Future of Work Commission, which will examine the impacts of technological innovation and develop long-term strategies for jobs. Its goal is to discover ways to ‘overcome the threat of insecure work, casualisation and automation, as well as the new opportunities technological advancement creates’.

It will also model a four-day work week without loss of pay and explore the prospect of introducing an Australian Universal Basic Income.


[1] Letts, S. (2019, April 18). Unemployment creeps back up to 5 per cent despite strong jobs growth. ABC. Retrieved from https://www.abc.net.au/news/2019-04-18/employment-and-unemployment-march-2019/11028402

[2] Letts, S. (2019, April 14). RBA baffled by the ‘tension’ between a weak economy and strong employment. ABC. Retrieved from https://www.abc.net.au/news/2019-04-14/rba-confused-by-gdp-and-jobs-data/11000178

[3] The Liberal Party of Australia. (2019). Our plan for more jobs in a stronger economy. Retrieved from https://www.liberal.org.au/our-plan-more-jobs-stronger-economy

[4] Karp, P. (2019, March 12). Labor vows to change Fair Work Commission rules to lift ‘unfair’ minimum wage. The Guardian. Retrieved from https://www.theguardian.com/australia-news/2019/mar/12/labor-vows-to-change-fair-work-commission-rules-to-lift-unfair-minimum-wage

[5] Hennessy, A. (2019, April 22). Federal election 2019: Fears for young workers over Labor wages policy. The West Australian. Retrieved from https://thewest.com.au/politics/federal-election-2019/federal-election-2019-fears-for-young-workers-over-labor-wages-policy-ng-b881173003z

[6] Australian Labor Party. (2019). Labor’s plan for higher wages. Retrieved from https://www.alp.org.au/policies/labors-plan-for-higher-wages/

[7] The Greens. (2019). Jobs & training for the future. Retrieved fromhttps://greens.org.au/platform/jobs#rights

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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