The Wages Crisis: Revisited, co-authored by Professor Andrew Stewart, Dr Jim Stanford, and Associate Professor Tess Hardy, makes an important contribution to the national debate on the wages crisis, which became a central feature of the Federal election campaign. The report provides a helpful analysis and evidence of the wages crisis, using several complementary measures to substantiate the labour movement claims that workers’ real wages have, and are, falling; that there is a crisis in wages and inequality; and that action is required to reverse the trend of falling real wages.
The report correctly credited consumer spending with driving pandemic recovery, noting that:
“Through the first year of recovery from the initial lockdowns (from the June quarter 2020, the low point of the recession, to the June quarter of 2021), increased household consumer spending accounted for 80% of the total expansion in real GDP. Household spending on new residences accounted for another 15%. All told, consumers thus carried 95% of the weight of post-COVID recovery”.
One factor the report overlooked is the impact of the Government’s decision to allow workers to raid their retirement savings held in trust in superannuation funds. Around three million workers withdrew some $37 billion from their superannuation accounts to supplement their discretionary expenditure during the pandemic. That accounted for around 30 per cent of the net transfers to households during the pandemic. The key point that the paper could have identified from this fact, given the theme of the paper, is the long-term detrimental effect on workers’ life cycle living standards.
Another curious point the paper makes is that it attributes the rise in inflation to predominantly external factors. It states that:
“…. the surge in inflation clearly reflects unique factors, largely external, related to the pandemic and other global shocks. These include disruptions in supply chains, shortages of some products (such as semiconductors and building supplies), and huge increases in energy prices following the Russian invasion of Ukraine”.
Such an assertion is inadequate and is not the complete explanation for rising costs of essentials that make up the CPI basket of goods such as fresh food, electricity/gas and rents. Much of the price movement in these essential household goods and services derive from the behaviour of domestic producers/service providers, often oligopolists. This draws attention to the question of capitalist accumulation and the maintenance of profits, which itself is a factor of the way that surplus value is created in a capitalist economy.
Had the paper delved a little deeper into the explanations of rising prices coinciding with an economic crisis created by a health pandemic, and the factors behind the skewed distribution of national income to capital, it may have influenced the paper’s policy prescriptions, addressed in the final section of the report.
While all the reform proposals advocated are important and necessary, they do not tackle the fundamental dynamics and consequential power relationships that arise from the capitalist organisation of production and service delivery. Nor do they tackle the question of the adequacy of public finances to fund increased public sector pay and to fund care services to a level that would appropriately reward undervalued care workers. This requires policy prescriptions around corporate tax which both major parties avoided.
Furthermore, achievement of the paper’s policy prescriptions relies almost entirely on the capacity of workers and their trade unions to influence a program of legislative/regulatory reform, yet the paper did not point to a program that can build a workers’ movement or a worker-community alliance that could successfully campaign for the reforms advocated, or effect a shift in capital-labour power relationships.
As the wages debate in the election campaign revealed, reliance on government, even a Labor Government, to deliver the very modest reform package advocated in the paper, is a forlorn hope. Even if it were delivered in full, this would leave capitalist power relationships and private market dynamics largely untouched, with workers still facing exploitation of their labour contribution, and severe wealth inequalities in society.
These dilemmas would be fertile ground for further analysis, and to advocate a more comprehensive and strategic reform plan in the spirit of Laurie Carmichael.
Rod Pickette is a Policy Adviser at the Maritime Union of Australia.