ANALYSIS: Can we afford real wage cuts and soaring rate hikes?
abc.net.au/news/real-wage-cuts-soaring-rate-hikes-verrender-column/101355632Consider all those high-brow economic models, the amount of brainpower employed — not to mention the huge store of data and experience — we can draw upon.
There's just one minor detail they appear to have overlooked. Things have changed since the 1970s, a lot. Why has wages' growth been so slow? And, given we now have the lowest unemployment rate in half a century with more available jobs than workers to fill them, why are wages still only growing modestly?
Wages, on an annual basis, are rising at just 2.6 per cent. That's way below inflation at 6.1 per cent. And it comes at a time when we supposedly have — yep, you guessed it — a chronic shortage of labour. Perhaps the biggest problem is that labour doesn't operate in a free market, so prices — wages — don't respond as readily to supply and demand changes.
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