A weakening of worker bargaining power against employers and less inflation-linked pay rises mean a wage-price spiral is unlikely to be repeated, RBA researchers say.
A weakening of worker bargaining power against business and less automatic inflation-linked pay rises mean a global wage-price spiral that occurred in the 1970s is unlikely to be repeated, according to Reserve Bank of Australia researchers.
Stagflation arrived with inflation surging to 15 per cent in 1974 from 3.5 per cent in 1970, and the jobless rate jumping to 5 per cent by 1975 from just 1.6 per cent.RBA governor Philip Lowe has become wary of a potential wages breakout, due to the unemployment rate hoveringDr Lowe has said that workers and unions must accept temporary real wage cuts to avoid a 1970s-style wage-price spiral and to stop higher unemployment.
“One group of these factors relates to the pricing power of workers and firms, which has fallen over the past decades as a result of institutional change and increased globalisation raising competition. “High rates of trade union membership or collective bargaining coverage will tend to strengthen workers’ power.
“They have therefore started raising policy interest rates significantly, and their public statements reference strong commitments to ensure that inflation returns to target.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Scrutiny on RBA increases with issues paper releasedScrutiny is increasing on the Reserve Bank of Australia as a paper is released today discussing reforms for the central bank in an independent review. An idea to reveal the voting history of individual board members could bring the bank in line with other banks around the world, such as in the US. The issues paper canvasses a wide variety of issues and raises questions about whether the Reserve Bank’s inflation target is appropriate, how its policy could deal with supply side shocks and whether it has been communicating effectively to Australians.
Read more »
RBA faces questions over how it explained its policy trade-offsThe way the Reserve Bank prepared Australians for changes in interest rates is on the agenda as an independent review canvasses how the institution deals with future pandemics and shocks to global supply chains | swrighteconomy
Read more »
RBA has to raise rates to fight inflationCalls for governor Phil Lowe to resign are ill-informed. The RBA’s policy of raising rates is the only way to fight inflation.
Read more »
RBA has to raise rates to fight inflationCalls for governor Phil Lowe to resign are ill-informed. The RBA’s policy of raising rates is the only way to fight inflation.
Read more »
Captaining Australia in all three formats ‘not realistic’ for Cummins as Warner puts hand up.patcummins30 has conceded it’s unrealistic for him to be Australia’s sole captain across all three formats, as he again called for davidwarner31’s lifetime leadership ban to be lifted. 7Cricket 7NEWS
Read more »
RBA faces questions over how it explained its policy trade-offsThe way the Reserve Bank prepared Australians for changes in interest rates is on the agenda as an independent review canvasses how the institution deals with future pandemics and shocks to global supply chains | swrighteconomy
Read more »