It's the economy, stupid!

 
  HardWorkingMan Chief Commissioner

Location: Echuca
Australia's low wage growth confirmed by the ABS again today - smashing the budget forecasts according to Business Insider:

“This low wages growth reflects, in part, ongoing spare capacity in the labour market,” said Bruce Hockman, chief economist at the ABS. “Underemployment, in particular, is an indicator of labour market spare capacity and a key contributor to ongoing low wages growth.”

The ABS said that private-sector wages, employing the vast majority of the Australian workers, grew by just 1.78% over the year, the slowest pace on record, undershooting the 1.79% pace reported in the year to march this year.

Over the quarter, private wages grew by 0.4%, the weakest result since the September quarter of 2009. That’s GFC territory.

It's hard to imagine that our economy is doing so well when there's a chronic lack of demand for labour?
"Underemployment".  Let's unpack that a bit more.  Dare I say that a reason for this is parents desiring to spend more time with their kids (i.e. Tag-team parenting and work duties which is now very common as workplaces try to be more flexible).  And with a service-based economy this would be more prevalent as well?

Another factor could be the "keep your job but cut back the hours" request from the boss...
Carnot
There's also an underclass developing that want work 5 days a week but due to the businesses not doing well are getting 1 to 2 days a fortnight.  These are people that want to work and often have relevant qualifications but the offshoring and 457 visas along with international dumping are putting the companies in positions where they can't hire.

EG Murray-Goulburn's closure of the Rochester plant due to the 'unavailability of milk supply' (which appears to have been caused by their price to farmers dropping below the cost of production and MG wanting the difference they had already paid repaid) has already caused house prices to drop and a couple of businesses to close.  Those moving to other areas are finding it hard to get any jobs in their new locations and what are available are casual - meaning no holiday pay, sick leave, unable to get loans to purchase property, hard to get rental property due to the inconsistent income etc.  

I wish it was a choice to cut back but a lot of people can't afford it and are living week-to-week

Sponsored advertisement

  don_dunstan The Ghost of George Stephenson

Location: Adelaide proud
EG Murray-Goulburn's closure of the Rochester plant due to the 'unavailability of milk supply' (which appears to have been caused by their price to farmers dropping below the cost of production and MG wanting the difference they had already paid repaid) has already caused house prices to drop and a couple of businesses to close.  Those moving to other areas are finding it hard to get any jobs in their new locations and what are available are casual - meaning no holiday pay, sick leave, unable to get loans to purchase property, hard to get rental property due to the inconsistent income etc.  
HardWorkingMan
It's the enormous decline in the quality of jobs that's at the core of this problem and it affects all sorts of things like the credit-worthiness of people. Not that it stops people from getting loans - I have friends in a small town near Ballarat and a house near them sold for $400,000 with the new owners some total ferals from the other end of town being the new owners. Being a small town the word is that said ferals financed their new purchase with a $10,000 deposit - their only income being (apparently?) Centrelink. I guess those mortgage brokers can work wonders with your true financial position!

The Aussie mortgage market is probably loaded to the gills with people like that; the Big Four are still exposed to most of that market as we discussed recently.

Anyway... in other news today I saw that the Chinese Central Bank is spending big on trying to work out how to operate a purely crypto-currency system in anticipation of interest rates having to go negative at some stage in the future - as they already have in various other countries (QZ Media). I guess if people get wind that cash will be abolished then their first instinct is to hoard heaps of it - the other interesting thing I was reading recently was that many Aussie $100 notes are actually being hoarded by elderly migrants who don't trust banks, both here and in China (News.com.au). I guess it's only a matter of time before they try and abolish cash here in the interests of bolstering the financial system?
  don_dunstan The Ghost of George Stephenson

Location: Adelaide proud
Jessica Irvine in the Fairfax papers today telling us that we just need to suck up the ultra-low growth in wages because it's a natural consequence of adjusting out of the mining boom:

Most of the mining booms in our history have ended in periods of rapid inflation and sharply rising unemployment.

We have avoided that fate. Our problem is, in