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Category: Media Releases

  • Public Sector Pay Freezes Could Push Economy From Recession to Depression

    Governments are devoting unprecedented resources to protecting Australians against the health and economic effects of the pandemic, but a contradictory push to adopt fiscal austerity measures is also becoming apparent. Leaders of governments at all levels — federal, state and local council – have already announced plans to freeze wages and cancel previously agreed pay raises for public servants.

    Key findings:

    • At least 35% of the purported ‘savings’ from freezing public service pay is offset by the loss of direct tax revenues that would have been collected as a result of higher income and spending by public servants. And considering other tax revenue losses from the resulting slowdown in broader wage growth, even more of those ‘savings’ are never realised.
    • Pay freezes in the public sector spill over into weaker economy-wide wage growth through three key channels: a composition effect, a demonstration effect, and a macroeconomic effect.
    • Freezing pay for even short periods reduces the lifetime income and superannuation savings of public sector workers by tens of thousands of dollars, because it permanently reduces their lifetime wage trajectory.
      • A 6-month pay freeze for a typical federal APS worker will reduce career earnings by an estimated $23,500, and superannuation accumulations by another $4000 or more. The longer 2-year freeze contemplated for Brisbane local council workers would reduce career earnings by over $100,000, and superannuation accumulations by $17,500.
    • Misguided public sector wage restraint in the aftermath of the GFC short-circuited an initial recovery in private-sector wage trends in 2010-11, and helped lock in a lasting deceleration of national wages after 2013. Since then Australia has experienced the slowest sustained wage growth in the entire post-war era.

    “Pay freezes are being imposed at the very moment when public sector workers such as healthcare workers, first responders, teachers and social service providers are performing vital tasks, at personal risk to themselves, to support Australians through the pandemic. Freezing pay for these essential workers is not just morally questionable — it’s also a major economic mistake,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    “The motivation for public sector wage austerity seems more ideological than fiscal or economic: pay freezes are justified with appeals to ‘shared sacrifice,’ and a symbolic desire to ‘tighten the purse strings’ at a moment when governments are about to incur their largest deficits in history.

    “However, our research shows these arbitrary pay freezes are both unfair and economically counterproductive. Government policy should be driven by economic reality, not political optics.

    “Public sector wage austerity imposed after the Global Financial Crisis helped ‘lock in’ historically slow wage growth in the private sector in the years that followed. Since then, wages in Australia have grown at their slowest sustained rate in the post-war era.

    “Australia cannot tolerate a further deceleration of wage and price inflation. Inflation was already close to zero, chronically falling below the RBA’s inflation target, even before the economy was hit by the double shock of bushfires and COVID-19.

    “Economy-wide deflation is associated with long-term depression. Australia cannot risk letting any COVID-19 recession turn into a depression. At this pivotal moment, governments’ priority should be anchoring price expectations, supporting nominal incomes, and contributing to aggregate demand. Normal wage gains should be implemented in the public sector and encouraged in the private sector.”

    The post Public Sector Pay Freezes Could Push Economy From Recession to Depression appeared first on The Australia Institute's Centre for Future Work.

  • 81% of Australians support JobKeeper for all Casual Workers

    More than eight in ten Australians support extending JobKeeper to all casual workers.

  • Go Home on Time Day 2019: Australian Employers Pocketing $81 Billion Worth of Unpaid Overtime

    The Centre’s 11th annual ‘Go Home on Time Day’ report also reveals the growing polarisation of working hours, between Australians who have too much work and others who can’t get enough. While 21 percent of Australians in full-time employment are working more than they want to, 48 percent of part-time workers and 64 percent of casual workers want to work more hours.

    “There is an epidemic of time theft in Australia right now and it is costing workers tens of billions of dollars, each and every year,” said Bill Browne, researcher at The Australia Institute and author of the report.

    Each November, the Centre urges Australians to appreciate the value of their legitimate time off by leaving their jobs at the end of their paid workday.

    “Today is the day we ask all Australian workers to go home on time. We need to put limits on our work – and push back against the increasingly common expectation among employers that we should stay late for free.

    “Our research has shown that employees are regularly staying late, coming in early, working through their lunch or other breaks, taking work home on evenings and weekends or being contacted to perform work out of hours.

    “Most Australians wouldn’t dream of working for 6 weeks without pay, but that is happening every single year in the average Australian job.

    The Centre’s 2019 ‘Go Home on Time Day’ survey indicated that even part-time and casual workers, most of whom want more paid hours of work each week, are still being asked to work unpaid overtime.

    “At the same time as many Australian workers report they would prefer more hours of paid work, unpaid overtime is an all too frequent occurrence,” Browne said.

    “In an era of wage stagnation, underemployment, insecure work and significant cost of living pressures, Australian workers cannot afford to give their time away to employers for free.

    “To end the epidemic of time theft, regulators must enforce existing rules regarding maximum hours of work on a more consistent basis, and provide workers with more choice to refuse overtime and work shorter hours. Workers, either individually or through their unions, must also demand that employers respect their right to leisure time – for their own benefit, and for the good of Australian society.”

    The post ‘Go Home on Time Day’ 2019: Australian Employers Pocketing $81 Billion Worth of Unpaid Overtime, Report Reveals appeared first on The Australia Institute's Centre for Future Work.

  • Chronic Unemployment a Consequence of Deliberate Economic Policies

    New research from the Centre for Future Work shows that there is no statistical evidence for the long-held assumption that if unemployment falls below its so-called “natural” or non-accelerating inflation rate (the NAIRU)—currently thought to be around 5% unemployment—that inflation and wages will grow uncontrollably. The report concludes that Australia’s controversial NAIRU concept and it’s use in economic policy should be abandoned.

    Key Findings:

    • Australian macroeconomic policy maintains elevated unemployment in order to restrain wage growth and inflation, this is known as the non-accelerating inflation rate of unemployment (NAIRU).
    • There are around 3 million Australians who would like to work, or more work, but can’t: that’s more than four times higher than the official unemployment estimate.
    • The economic benefits of reducing unemployment are enormous. Every one-percentage point reduction in unemployment results in 134,000 new jobs, $10 billion in additional output, and billions of dollars in revenue for governments.
    • Monetary and fiscal policy should aim to steadily reduce unemployment to as low as possible, rather than targeting a certain minimum unemployment rate.

    “In Australia, we blame the unemployed for their supposed lack of skills and motivation but at the same time, use macroeconomic policy to stop unemployment getting ‘too low’ – it’s an enormous contradiction,” says David Richardson, senior research fellow at The Australia Institute.

    “Record-low wages growth, and Australia’s generally sluggish economic performance, make the need for a change in policy direction all the more urgent.

    “It is time for a fundamental rethink of Australian macroeconomic policy, which should instead be focused on restoring genuine full employment as the top priority.

    “Since chronic unemployment is the outcome of deliberate policy, the least society can do is fairly compensate those who have been hurt by this policy – raising Newstart would be a start.”

    The post Chronic Unemployment a Consequence of Deliberate Economic Policies appeared first on The Australia Institute's Centre for Future Work.

  • University-to-Job Pathways Key to Boosting Graduate Employment Outcomes

    New research shows active strategies to directly link university degrees to a job are needed, to better support university graduates as they negotiate a rapidly changing labour market.

    The report, by the Australia Institute’s Centre for Future Work, shows that employment outcomes for university graduates have deteriorated significantly since the Global Financial Crisis, with only 73% of recent university graduates finding full-time employment within 4 months of graduating – down from 85% in 2008.

    Key Findings:

    • At the individual level, a university degree is still very valuable: people who hold a university degree are more likely to be employed, more likely to be employed in a stable job, and earn higher average wages and salaries. Half of new jobs created in the coming 5 years will require a degree.
    • However, many recent graduates report being underemployed or in insecure jobs that do not utilise their specific skills—including graduates who studied technical skills or STEM subjects.
    • The report makes 9 recommendations to improve university-to-work transitions for future graduates, including establishing a national higher education planning capacity, and creating a timely and high-quality labour force information system.

    Alison Pennington, Senior Economist, Centre for Future Work:
    “Employment outcomes for university graduates have deteriorated significantly since the GFC,” says Alison Pennington, Senior Economist at the Centre for Future Work and co-author of the report.

    “Finishing tertiary education and finding a job in your field is a difficult and haphazard experience, which is leaving many graduates in jobs that do not fully, or even partially, use their hard-won and expensively acquired skills.

    “Vocational degrees, which are tied to specific occupations like health care, engineering or teaching, have the best employment placement rates. As seen in these professions, directly linking degrees to jobs through paid placements, occupational licensing and accreditation would greatly improve the situation of graduates.

    “A hands-on and direct approach that channels graduates directly into relevant career opportunities is needed. Australia could learn a lot from other countries, especially in Europe, where this is already being achieved through forecasting future skill requirements and planning higher education offerings accordingly.”

    Noel Edge, Executive Director of Graduate Careers Australia:
    “The overwhelming message from this report by the Centre for Future Work is the need for further research in graduate employment,” says Noel Edge, Executive Director of Graduate Careers Australia.

    “Research to explore the emerging work environment for tertiary education students in Australia, beyond basic government labour-market forecasting and graduate outcomes reporting, simply does not exist.”

    The report was commissioned by Graduate Careers Australia.

    The post University-to-Job Pathways Key to Boosting Graduate Employment Outcomes appeared first on The Australia Institute's Centre for Future Work.

  • Million jobs not what it used to be: new report

    New analysis of labour market performance released today by The Australia Institute’s Centre for Future Work, shows Australia’s job creation performance over the past five years has been weak relative to population growth and compared to past periods of history.

    “A million jobs in five years sounds like an impressive figure, but there are now over 20 million Australians of working age, and our population is growing very rapidly. A million new jobs every five years, isn’t even enough to keep up,” says Dr. Jim Stanford, Director of the Australia Institute’s Centre for Future Work.

    “A closer look at the evidence shows that both the quantity and the quality of work being created in Australia’s labour market is inadequate to the needs of our growing population, and highlights the role part-time work has played in inflating the apparent total number of jobs created.

    “Part-time employment has accounted for almost half of all new work created since 2013. Without the this rapid expansion of part-time work, which converts a given amount of hours of work into more jobs, the growth in employment would have fallen well below one million.

    “Due to soaring part-time employment, the number of hours worked by each worker has fallen to the lowest on record. Part-time workers also experience lower hourly wages, higher casualisation, and are more dependent on the minimum conditions of modern awards.

    “Along with the declining quality of jobs, our research shows an unprecedented stagnation of wages since 2013. With nominal pay lagging behind inflation, the real purchasing power of Australian works has declined for the first time since the recession-wracked 1990s.

    “This deterioration occurred in a time when the economy was growing steadily. Instead of constituting some kind of economic triumph, the last five years really represents a lost economic opportunity.”

    The post Million jobs not what it used to be: new report appeared first on The Australia Institute's Centre for Future Work.

  • Workers’ Share of Economic Pie Shrinks Again

    That represents the third consecutive quarterly decline in relative labour compensation.

    Labour Share

    “A decline in the labour share of GDP indicates that workers’ wages and salaries are not keeping up with the growth of Australia’s economy,” explained Dr. Jim Stanford, Economist and Director of the Centre for Future Work. “And given that GDP growth itself was very anemic in the September quarter (expanding just 0.3%), that’s an especially weak result.”

    The labour share of GDP is now on track to set a new record low for 2018, below even last year’s average of 47.1% – which was the lowest annual average labour share recorded since the ABS began gathering modern GDP statistics in 1958.

    The weak growth of total wages reported in the GDP data was surprising, given the apparently strong increase in employment recorded over the past year. Labour compensation per employee increased by just 1.9% in the year ending in September, barely matching the increase in average consumer prices over that period. Wage growth in the private sector has been even slower.

    Despite a decline in the official unemployment rate over the past year, wages have been held back by a combination of high underemployment (workers who want more hours of work), the growing share of insecure and part-time jobs, and the erosion of traditional wage-setting institutions (including collective bargaining).

    With labour costs falling as a share of total output, profits have expanded. Corporate operating surpluses expanded by another 7.1% in the year to September, and reached their highest share of GDP (25.22%) since March, 2012.

    The Centre for Future Work reviewed the long-term decline of the labour share of Australian GDP in a recent research symposium, published in the Journal of Australian Political Economy.

    The post Workers’ Share of Economic Pie Shrinks Again appeared first on The Australia Institute's Centre for Future Work.

  • Go Home On Time Day 2018: Australians Owed $106 Billion in Unpaid Overtime

    A national survey undertaken as part of the report has shown that the average Australian worker now puts in six hours of unpaid overtime per week, which equates to working an extra two months for free every year. That’s an increase from 5.1 hours on average in last year’s survey.

    “Australians are working more unpaid overtime than ever before, and they’re paying a high price for it,” said Troy Henderson, Economist at the Centre for Future Work.

    “Time theft takes many forms, including employees staying late, coming in early, working through their lunch or other breaks, taking work home on evenings and weekends or being contacted to perform work out of hours.

    “Most Australians wouldn’t dream of working for two months without pay. But it’s spread out over the whole year, and has become part of the implicit expectations of too many jobs. ‘Time theft’ has thus become endemic across the whole labour market.

    “Today we ask that all Australians go home on time and try to limit the unpaid overtime they work. And stopping time theft is ultimately the responsibility of employers and government, too, not just individual workers: employers must value and respect the leisure time of workers, and recognise that work cannot take over our entire lives.”

    The survey indicated that even part-time and casual workers – most of whom want more paid hours of work each week – are being asked to work unpaid overtime (averaging over 4 hours per week for part-timers and almost 3 hours per week for casuals). “Given the problem of underemployment and precarious work in today’s labour market, it is especially unfair that part-time and casual workers are being pressured to work for free,” Mr. Henderson added.

    This year’s Go Home on Time Day survey also included a special questionnaire on the use of digital surveillance and monitoring in Australian workplaces. 70% of respondents said their employers use at least one form of digital surveillance or monitoring, including cameras, GPS tracking, monitoring internet or social media activity or counting keystrokes, to monitor employees – and sometimes to discipline or even dismiss them.

    “Technology can have a strong positive effect in the workplace, but our research shows it is also being used in ways that increase pressure on employees and reduce the level of trust in workplaces,” Mr. Henderson said.

    “It’s clear from our research that millions of Australians are losing out to time theft. Both underemployed workers, and those who work too much, are giving up their precious time for free. All Australian workers have the right to go home on time.”

    The post ‘Go Home On Time Day’ 2018: Australians Owed $106 Billion in Unpaid Overtime, Report Reveals appeared first on The Australia Institute's Centre for Future Work.

  • Secret Weapon Overlooked in Fight Against Financial Misconduct

    The Centre for Future Work has proposed to the Commission that a system of sector-wide collective bargaining in the financial industry could establish clear and ethical benchmarks for compensation, avoiding the problem of ‘conflicted remuneration’, which is behind much of the misconduct the Royal Commission has exposed.

    The Centre for Future Work’s submission to the Royal Commission proposes a uniform compensation system, to apply across the whole industry, consistent with the principles of ethical banking:

    • Uniform compensation can be achieved via a sector-wide collective bargaining system, in which employer and union representatives negotiate standard compensation patterns to apply to all participants across the industry.
    • Compensation in each job to be tied to qualifications and experience; separate pay grids could be specified in various branches of finance (including major banks, insurance, superannuation, and financial advice).
    • Clear and enforceable limits on sales- or revenue-based incentives would be specified – eliminating what the Royal Commission has confirmed is a key motivation for misconduct.
    • Instead of depending solely on government regulators to stop misconduct, enforcement of compensation standards would become part of the regular administration of the collective agreement.

    “At present, flawed pay systems create perverse incentives for banks and brokers to push debt, insurance, and financial services to Australians,” says Dr. Jim Stanford, Director of the Centre for Future Work.

    “Financial professionals can reap tens or hundreds of thousands of dollars in commissions, bonuses and so-called ‘introducing’ fees; top executives pocket millions.

    “It is inevitable that these incentives lead sales staff and executives to sidestep or ignore basic rules and standards such as ‘know your client’ rules, fee transparency and responsible lending.

    “Consumers, many of them vulnerable, end up with expensive commitments they don’t need or – in many cases – even understand.

    “Under a sectoral agreement, hundreds of managers, union officials and delegates throughout the financial industry would be responsible for enforcing the ethical pay practices spelled out in the agreement.

    “Unfortunately, Australia’s current restrictive industrial relations laws generally prohibit collective bargaining on a multi-firm or sector-wide basis.

    “These restrictions are unusual. Most industrial countries permit, and even encourage, multi-firm, pattern, or industry-wide bargaining as an efficient way to determine consistent benchmarks for pay and conditions, and ensure that ongoing economic and productivity growth translates into rising living standards.”

    The Centre’s submission argues these restrictions on sector-wide bargaining should be reconsidered in light of the pervasive pattern of financial misconduct – and the key role of perverse compensation systems in motivating that misconduct.

    “Sectoral collective bargaining could help reform compensation and reduce financial misconduct on a uniform, industry-wide basis,” Stanford said.

    “The Royal Commission should explore standardised sector-wide collective agreements as a promising response to the problems it has documented, and the Commonwealth Government should eliminate its unusual restrictions on collective bargaining to allow this important reform.”

    The post Secret Weapon Overlooked in Fight Against Financial Misconduct appeared first on The Australia Institute's Centre for Future Work.

  • Workers’ slice of Australian economic pie gets smaller

    The Australia Institute’s Centre for Future Work has today published a new research symposium documenting how workers’ slice of the national economic pie continues to get smaller.

    Key findings:

    • From peak levels of 58 per cent of GDP in the mid-1970s labour compensation — including wages, salaries, and superannuation contributions — declined to just 47 percent in 2017, their lowest level since 1960.
    • Real wages have consistently lagged behind the ongoing growth in labour productivity, meaning workers are not getting paid enough to buy back the goods and services they produce.
    • The loss of labour’s share of GDP translates into the redirection of over $200 billion in income per year from workers to other groups in society (mostly corporations).

    “In recent years, wages have barely kept up with consumer price inflation – and for many workers, they have fallen behind,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    “The fact that the workers’ slice of the economic pie continues to get smaller speaks volumes about the lopsided power imbalance in today’s labour market.

    “The decline in Australia’s labour share from the 1970s peak to the present, ranks among the worst of all OECD countries, even worse than the United States.

    “Almost the entire decline in the labour share has been reflected in a corresponding increase in the share of GDP going to corporate profits – especially the financial sector.

    “In short, while the workers’ share has continued to get smaller, the share of corporate profits has continued to get larger.

    “By comparison, in some countries the labour share has been stable or rose during the same period, disproving the claim that this trend is somehow ‘universal’ or ‘inevitable’.

    “Without urgent measures to strengthen labour standards and protections, including stronger minimum wages and a restoration of meaningful collective bargaining, this decline will almost certainly continue.

    “The company tax cuts for big business now being proposed by the federal government are just the icing on top of an already-rich cake.”

    This research resulted from a special panel of experts convened by the Centre for Future Work, at the Society for Heterodox Economists conference at UNSW in Sydney last December. The papers from that panel have been peer-reviewed, and are published this week in the Journal of Australian Political Economy.

    Authors contributing to the symposium include Dr.David Peetz (Griffith University), Dr. Shaun Wilson (Macquarie University), Dr. Margaret Mackenzie (Economist, Australian Council of Trade Unions), and Dr. Jim Stanford (Economist and Director of the Centre for Future Work).

    The post Workers’ slice of Australian economic pie gets smaller appeared first on The Australia Institute's Centre for Future Work.