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Category: Democracy & Accountability

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  • Hollywood actors showing that unity is strength

    Hollywood actors showing that unity is strength

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on July 20, 2023

    When workers are united, and able to collectively bargain, they can win good outcomes

    The Screen Actor’s Guild-American Federation of Television and Radio Artists strike launched last week against Hollywood studios has brought large attention because of the celebrities involved. But as Chief Economist, Greg Jericho, notes in his Guardian Australia column, there are lessons for Australian workers as well.

    For the past 40 years there have been consistent efforts in Australia and other English speaking countries to reduce to power and role of unions in industrial relations. And while we are often told that there are reasons such as a need for greater flexibility to ensure increased productivity, the reality is there has been no evidence that any of the changes to IR laws have produced anything like the productivity that was promised.

    The past decade has seen as much “flexibility” and reduced power for unions as any business group could (and did) desire, and yet productivity levels have plummeted.

    The problem, as the SAG-AFTRA strike makes clear, the reason governments and business groups have agitated against unions and the ability to conduct industrial action is not because of concerns about productivity, but because unions garner better wages for their members and faster wage growth.

    The past decade shows that as the number of days lost to industrial action have fallen, so too has wage growth.

    The Hollywood strike might notionally be about payment for film and productions on streaming services and concerns about AI, but as SAG-AFTRA president Fran Drescher made clear, it is truly about workers demanding respect, and to be honoured for their contribution.

    Australian workers should learn from the strike and see that unity and union membership delivers benefits – and we know this is true, because employers will do anything they can to prevents it happening.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • The key legislation changes that will help workers get a better deal

    The key legislation changes that will help workers get a better deal

    by Fiona Macdonald in The New Daily

    Fiona Macdonald

    Acting Director, Centre for Future Work

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    Originally published in The New Daily on July 14, 2023

    In recent years, workers have been held back from demanding better working conditions and pay by a lack of bargaining power.

    However, with recent changes to industrial relations laws, and with unemployment at record low levels, some workers are now in a better position to bargain for better pay and conditions.

    Slow wages growth, low bargaining coverage and high levels of insecure work are good indicators of how workplace power imbalances have stifled prospects for many employees.

    Over the last decade Australia’s wage growth has been at its weakest since the middle of the last century, coverage of workers by enterprise agreements has rapidly eroded, and over a third of workers are now in insecure casual, labour hire or fixed-term jobs.

    Bargaining hobbled

    Despite low unemployment – meaning there are fewer workers available to fill vacancies – employees have not been able to bargain for higher pay and the real value of wages has been declining.

    Industrial relations reforms passed by parliament in late 2022 are designed to restore some balance to the workplace.

    The changes don’t mean there is a massive shift of power to workers but, with the removal of some barriers to bargaining, there should be greater opportunity for employees to gain improvements at work.

    At the present time, the labour market is tight and employers are competing to find and retain workers so they may be prepared to offer higher wages and other benefits.

    Already, unions representing early childhood education and care workers have applied to use a new multi-employer bargaining option – which came into force last month – to seek a pay increase for these low-paid workers.

    While it will be some time before we see any outcomes, there is early evidence that other bargaining reforms are getting workplace bargaining moving after years of decline. Certainly some employers may now be more ready to negotiate enterprise agreements to avoid being roped into multi-employer agreements.

    Other non-bargaining reforms introduced as part of the 2022 Secure Jobs, Better Pay package attracted much less attention than bargaining changes during last year’s debates over the new laws.

    However, these other changes are not insignificant for working conditions.

    The right to flexible work

    More than half of all employees now have new rights to request flexible work, including employees who are parents of children of school age or younger, carers and workers aged 55 or over, those with a disability or people experiencing or supporting someone experiencing family violence.

    Before the flexibility changes, which came into effect in June, some limited flexible work rights already existed. However, now there is much greater onus on employers to show there are reasonable business grounds if they wish to refuse employees’ requests for flexible work.

    While this is no guarantee that all employees can access the flexibility they need, it has potential to be a game-changer in some workplaces through pushing employers to find ways to organise work for greater employee-friendly flexibility.

    Research shows that Australians are some of the most stressed and overworked of all workers worldwide. We know we need better-work life balance.

    Post-pandemic, there is widespread experience of more flexible work arrangements and greater recognition of the benefits of flexible work.

    There is some impetus to lock in more employee-friendly flexibility, and workers are having some success in achieving these changes through collective bargaining.

    Working lives are longer than ever, including as the retirement age has just been increased to 67 years.

    Along with pay increases that stop the decline in the value of wages, bargaining for better work-life balance will continue to be important.


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  • If the unemployment rises to 4.5% who is likely to lose their job?

    If the unemployment rises to 4.5% who is likely to lose their job?

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on July 13, 2023

    The RBA is currently targeting a 4.5% unemployment rate, and that is going to hurt young, low skilled and low paid workers,

    The next 12 months ahead look to be a time of rising wages, and rising unemployment. The Reserve Bank is trying to raise unemployment in order to prevent rising wages. It’s target of 4.5% will see around 130,000 to 150,000 more people unemployed than is currently the case.

    Labour market policy director, Greg Jericho, in his Guardian Australia column, examines which workers are likely to be the ones who will lose their jobs.

    In a bitterly ironic point, he notes that these are the same workers whom Deputy Governor of the Reserve Bank Michele Bullock recently boasted were the ones who had gained the most from the strong employment growth of the past 18 months:

    people on lower incomes and with less education who have benefited the most from the strong labour market conditions

    More worrying is that the Reserve Bank’s own estimates suggest that the rises in unemployment over the next year will see Australia breach the “sahm Rule” of recession, in which the unemployment rate rises more than 05%pts in a year. Oddly however the RBA’s correspondence on the issue revealed in an FOI disclosure has them suggesting that for Australia the recession trigger is a 0.75% rise.

    Either way, history suggests that when unemployment rises in a year by the amount the RBA is estimating it usually keeps rising.

    The RBA’s own estimates show just how close to a recession the economy is set to go in the next year. It already looks likely to hit workers with low skills and low paid jobs, and if the RBA gets it wrong, it will quickly hit many more of society.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Bolstered by a biased tax system, house prices keep rising

    Bolstered by a biased tax system, house prices keep rising

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on June 15, 2023

    As interest rates rise, the gains from negative gearing increase.

    Despite rising interest rates, the latest figures from the Bureau of Statistics show that Australia’s house prices rebounded in the March quarter of this year. Policy director Greg Jericho writes in his Guardian Australia column that since the beginning of the pandemic property prices around Australia have risen 26% while at the same time average household disposable income has increased just 8%.

    This disparity has massive consequences for affordability. Had for example the median property price in Sydney risen in line with household incomes since June 2020, instead of being $1.15m it would be $954,000 – a $196,000 difference.

    Underlying the strength of the market even in the face of rising interest rates is the fact that Australia’s tax system is biased towards property investors.

    The most recent taxation statistics covering 2020-21 showed for the first time the number of investors recording property net profits was greater than those recording a loss. Such a situation only occurred because of the record low interest rates at the time. We know that the past 12 months will have seen a large spike in the number of people negative gearing their properties and thus not surprisingly housing remains an attractive investment not in spite of rising interest rates, but because of rising interest rates.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Blame Game on Inflation has Only Just Begun

    Blame Game on Inflation has Only Just Begun

    by Jim Stanford in The Canberra Times

    Jim Stanford

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    Originally published in The Canberra Times on June 8, 2023

    Every inflationary episode embodies a power struggle within society over who benefits from inflation, who loses out – and who will bear the cost of getting inflation back down.

    That’s because inflation never affects all prices and incomes evenly. Some prices shoot up, while others grow slowly or decline. Some incomes keep pace with rising prices (or even outpace them), while others lag far behind. Thus the impacts of inflation are always uneven. And this sparks economic and political controversy.

    This distributional conflict is readily visible in current Australian inflation. As prices took off after the lockdowns, corporate profits surged dramatically, reaching their highest share of GDP ever by 2022.

    Meanwhile, wages – which were historically weak even before the pandemic – lagged far behind. In the last two years, consumer prices rose 12.5% (and more for essentials, like food and energy). Average wages grew less than half as much – barely 6% – in the same time.

    That means the purchasing power of workers’ wages is falling. It’s the biggest and fastest real wage cut in postwar history – and record profits from those higher prices are the corollary of workers’ falling real incomes.

    Despite the fact that wages have lagged, not led, recent inflation, the powers-that-be are still targeting workers to bear the brunt of the anti-inflation effort.  The Reserve Bank is now using high interest rates to cool off employment and slow wage growth.

    This inflation has produced clear winners, and clear losers. So it’s a myth to proclaim that inflation “hurts all Australians,” pretending we can all join together in a shared national effort to wrestle prices to the ground.

    Our Centre for Future Work published research showing just how lopsided the impacts of inflation have been in Australia. We analysed official national accounts data from the ABS, including income flows, output data,  and changes in average economy-wide prices.

    From end-2019 (just before the pandemic) to September 2022 (latest data at the time), higher corporate unit profits accounted for 69% of excess inflation (over and above the RBA’s 2.5% target). Unit labour costs accounted for just 18%, and other stakeholders (including small business) the remainder.

    This confirmed that workers are the victims of inflation, not its cause, and raised big questions about the RBA’s determination to target wages (not profits) for tough anti-inflation medicine. Our findings sparked widespread interest and anger. So business peak bodies, and business-friendly commentators, have launched a steady stream of attacks against our report since its release in February.

    RBA and Treasury officials also disagree with our conclusions. They have not challenged our actual numbers: indeed, internal RBA memos replicated and confirmed our finding that wider corporate profit margins account for the lion’s share of higher prices since 2019.

    But despite this evidence, these officials deny soaring corporate profits are a concern in the anti-inflation battle. Profits grew most dramatically in the energy and mining industries, they say. This is certainly true – due in part to sky-high prices paid by Australians for petrol, gas, and other resource-intensive products. So we can’t magically exclude this super-profitable sector from our analysis of inflation, nor our plan for tackling it.

    They also claim profits outside of mining have not increased. This is false: non-mining profits have been less spectacular than resources, but profit margins have widened significantly, reinforcing inflation. Consumers are reminded of this every time they visit a supermarket, book an airline ticket, or try to rent an apartment.

    In sum, these arguments cannot deny that business has profited mightily from the current inflation – especially, but not solely, in energy and mining – while workers have suffered.

    A flip side of this class conflict over inflation was starkly visible last week, when the Fair Work Commission announced a 5.75% increase in Award wages. That doesn’t quite keep up with inflation, but it sure helps.

    Within minutes, the same corporate lobbyists so offended by our research, lined up to denounce the wage increase as inflationary. They want Australia’s lowest-paid workers, whose living standards have already declined, to sacrifice further. Little wonder business peak bodies hate ay public attention on their own record profits.

    The blame game over inflation will get more heated in the months ahead. Inflation is likely to ease, as many of the unique post-pandemic factors (supply chains, energy price shock, pent-up demand) that underpinned firms’ price increases gradually abate. But real wages have fallen – and workers, understandably, want to repair that damage.

    So workers will demand wage gains in excess of inflation. And by all rights, they deserve that. That need not cause further inflation, especially if record high profit margins come back to earth.

    Corporations, however, want to sustain their record profits as long as possible. They want to keep wages down, and the RBA seems determined to help. So buckle up: the great Aussie debate over inflation is just getting started.

    Jim Stanford is Economist and Director of the Centre for Future Work at the Australia Institute, and the author of Profit-Price Spiral: The Truth About Australia’s Inflation.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • The economy is slowing as households get smashed by yet more rate rises

    The economy is slowing as households get smashed by yet more rate rises

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on June 8, 2023

    A slowing economy and households closing their wallets is bad news with a Reserve Bank determined to keep raising rates

    The March quarter saw Australia’s economy grow a rather pathetic 0.2% and fall 0.3% in per capita terms. As policy director Greg Jericho writes in his Guardian Australia column, the economy is slowing at a pace that normally would see the Reserve Bank thinking about cutting rates.

    And yet as poor as these figures are, worse is likely to come as the March quarter does not include the two most recent rate rises and only a small amount of the impact from the rate rises in February and March. Both the Treasury and the RBA estimate the Australian economy will go backwards on a per capita basis over the next year and these figures suggest their estimates are if anything too optimistic.

    Households are reducing their savings as wages fail to keep up with inflation. Over the past 2 quarters, household consumption grew at an annualised pace of just 1%. Whenever household consumption has grown that slow the economy has either been in a recession or teetered on the edge.

    And yet despite acknowledging there was uncertainty over household spending, the RBA on Tuesday decided to raise rates in order to essentially slow household spending.

    All they have done is once again hit households that already need a standing 8 count.

    The figures pleasingly showed that total wages are now growing solidly due to both increased employment and better wage growth. But this has not come at the expense of profits, indeed corporate profits in the March quarter rose 3.2% – faster than the 2% increase in unit labour costs. Real unit labour costs rose just 0.2% in the March quarter while real unit profit costs rose 1%.

    This again highlights that profits more than wages drive inflation, and raising rates to slow wage growth by raising unemployment is a poor monetary policy that only risks an unnecessary recession.


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  • The level of public housing needs to return to previous levels

    The level of public housing needs to return to previous levels

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on June 1, 2023

    Australia needs more housing, and we definitely need more public housing

    There is rarely a debate in Australia that generates more heat than housing. The causes of housing unaffordability and the solutions to it are varied and often get bogged down in power plays and political scaremongering. But as policy director Greg Jericho notes, building more homes is a pretty obvious solution, and more public housing needs to be at the forefront.

    The NSW Productivity Commission this week released a report into housing in NSW that recommended “Building more homes where people want to live.” To this end it suggested raising average apartment heights in suburbs close to the CBD, allowing more development near transport hubs and encouraging townhouses and other medium-density development.

    All of this is worthy. And if combined with the reform of the negative gearing and the capital gains discount will do much good.

    But the report noted that “New South Wales experienced a 45% surge in priority applicant households on the social housing register, with 6,519 priority social housing applicants waiting for assistance as at 30 June 2022”. And yet it did not mention public housing or any social housing solutions at all.

    In the past public housing was a much greater share of Australia’s housing market.

    In 1983 14 public housing building approvals were made for every 100 private sector ones. Now it’s 1.7:100.

    The level of new housing per head of population has fallen and it is thus little wonder that house prices have risen beyond the means of many.

    We need more housing and we desperately need more public housing.

    In the 2019 election campaign, the ALP pledged 250,000 new houses over 10 years. That has now become 30,000 over 5 years under the proposed Housing Fund. It is time for more ambition from the government and more housing for low and middle income earners.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Don’t worry about a budget surplus, worry about a slowing economy

    Don’t worry about a budget surplus, worry about a slowing economy

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 11, 2023

    Rather than be a budget that will fuel inflation, the budget is actually closer to austerity than stimulation

    The Budget announced this week by Treasurer Jim Chalmers revealed a projected surplus in 2022-23 before returning to a deficit in the future years. In response many commentators and economists have suggested that the budget is therefore expansionary and will fuel inflation. But as policy director, Greg Jericho notes in his Guardian Australia column given the projected slowing economy, if anything the budget should be more expansionary.

    Most of the claims around the budget fueling inflation are based on the movement of the budget from surplus in 2022-23 to deficit in 2023-24. And usually, this would suggest that the government is stimulating the economy. But when we look at the actual figures within the budget, the overwhelming reason for the shift from surplus is due to parameter changes relating to oil, gas, coal and iron ore prices. The spending measures the government is proposing are hardly expansionary at all. Their direct impact on total household income is minimal, and the largest spending is on reducing medical and energy bills rather than directly giving households more money.

    When we look at the forecasts for public demand growth we see a level of expansion that is more akin to an austere budget than one attempting to stimulate the economy.

    But when we also look at the forecasts for economic growth over the next two years we see an economy slowing quite abruptly in a world that is teetering on a global recession. In the past, such weak forecasts for household spending and GDP growth would have seen governments spending more and lifting economic growth.

    This budget appropriately deals with the concerns of inflation by directly lowering the costs of energy and medical bills – it demonstrates that governments do have a role to play in lowering inflation and that it need not be done purely by the traditional view that the government must slow the economy. The economy is already projected to slow, and by this time next year the calls will likely be less about why the budget is not in surplus and more about what is the government doing to simulate the economy


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    Commonwealth Budget 2025-2026: Our analysis

    by Fiona Macdonald

    The Centre for Future Work’s research team has analysed the Commonwealth Government’s budget, focusing on key areas for workers, working lives, and labour markets. As expected with a Federal election looming, the budget is not a horror one of austerity. However, the 2025-2026 budget is characterised by the absence of any significant initiatives. There is

    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Affordability of a Liveable Jobseeker Payment is a Non-Issue

    Affordability of a Liveable Jobseeker Payment is a Non-Issue

    by Brett Fiebiger

    Brett Fiebiger

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    Commonwealth on Track for Diminutive Deficit or Surplus in 2022-2023

    In the lead-up to its 2023-24 budget, the Labor Government finds itself in an awkward position, accepting that the Jobseeker payment is “seriously inadequate” and an impediment to regaining work, yet professing that it lacks the financial capacity to afford a meaningful increase anytime soon.

    The Economic Inclusion Advisory Committee’s (EIAC) April 2023 Interim Report recommended raising Jobseeker from 70% of the Pension up to 90%. The current Jobseeker base rate for a single person with no children is $693.10 per fortnight. Lifting it up to 90% of the current Pension payment of $971.50 per fortnight would provide the unemployed with an extra $181.25 per fortnight (or $12.25 per day).

    Labor has baulked at the cost of the EIAC’s Jobseeker proposal. There is speculation that the upcoming budget will include a $50 per fortnight increase in the Jobseeker payment for those over 55 years of age. It is unclear if that increase will apply to everyone over 55 years of age, or just to the 55 to 59 year old cohort who are currently ineligible for the additional $52 per fortnight already available to those over 60 and who have been unemployed for longer than nine months.

    A $3.57 per day rise in the Jobseeker payment for those over 55 years of age (or between 55 and 59) seems rather stingy. One might expect that the plight of the unemployed—among the least well-off and most financially-constrained members of society—would be a high priority in the middle of a cost-of-living crisis.

    Before last year’s election, the Labor party abandoned a previous pledge to raise Jobseeker payments, on concerns about growing Commonwealth government debt. The EIAC then only came about as a concession to gain Senator David Pocock’s support for the Secure Jobs Better Pay Act 2022.

    Labor’s meme of “inheriting a trillion dollar debt that will take generations to pay off” has echoed the Coalition’s 2013 so-called “budget emergency”, also used to blame the preceding government. The nation’s allegedly dire fiscal position was cited by Bill Shorten as justification for not adopting the EIAC’s key recommendations: ‘We can only do what is responsible and sustainable and unfortunately the budget we inherited from the previous government is heaving with a trillion dollars of Liberal debt, so [we] can’t do everything.’

    The strategy of deflecting accountability for policy choices on grounds of fiscal constraint has become less credible, given the robust post-pandemic economic recovery and the boom in commodity prices – all of which has generated large improvements in the Commonwealth government’s fiscal position. As illustrated in Figure 1, the government’s underlying cash deficit for the current financial year (2022-23), once expected to be $100 billion, has shrunk dramatically.

    Sources: Australian Government, Budget Papers, Monthly Financial Statements. Author’s calculations.

    Indeed, the Commonwealth Government’s latest Monthly Financial Statements show that it is on track to post a very small deficit, or even a surplus, for the 2022-23 financial year. As of March 2023 the underlying cash balance (UCB) had improved by $23.3 billion over the estimates in the October 2022-23 Budget. If the year-to-date deficit changes little in the last quarter, and with higher GDP than previously estimated, then the UCB in 2022-23 would come in at a diminutive -0.5% of GDP. That’s insignificant by any meaningful economic standard.

    Further upside is possible. If the average monthly improvement from November 2022 to March 2023 continues in the last quarter of the financial year, the UCB in 2022-23 would be a surplus of $2.8 billion.

    Australia’s public debt load – also measured appropriately as a proportion of GDP (rather than in big scary ‘trillion dollar’ terms) is also modest when compared to the nation’s peers and to its own historical record. Our general government debt (including state governments) is lower than any G7 economy, and half the size of the average for advanced economies. The same cannot be said, however, for Australian households: their debt is higher than any G7 economy, and ranks second (behind only Switzerland) among all industrial countries (see Figure 2).

    Figure 2: Government and Household Debt

    Sources: International Monetary Fund, World Economic Database. Bank for International Settlements, Credit to the Non-Financial Sector.

    Having switched from “opposition mode” into “governance mode,” it makes sense for Labor to start to talk up the nation’s public finances. Such a narrative would be plausible given that Australia’s fiscal position is robust and sustainable: now and into the foreseeable future. That is the current assessment of the International Monetary Fund in its latest Article IV Consultation, amongst others.

    The prospect for further substantial improvement in the UCB over the forecasts – and perhaps even a surplus – should raise expectations about what the government can do to ease cost-of-living pressures. Arguably, however, a liveable unemployment benefit should be prioritised regardless of the economic and fiscal outlook.

    The EIAC’s Jobseeker proposal is estimated to cost $24 billion over four years. Implementing all of the EIAC’s other recommendations brings the cost to $36 billion. The annual cost of the full package would amount, respectively, to just 0.3% of GDP in the next financial year. Such expenditures, while having a diminutive impact on the Commonwealth Government’s fiscal position, would literally transform the lives of the unemployed.

    When all is said and done whether a nation should have a liveable unemployment benefit is a question of principles. There is an obvious option for Labor to allay its worries about the budgetary or inflationary pressures of a liveable Jobseeker payment: namely, jettison the 2024-25 Stage 3 tax cuts, that are estimated to cost $300 billion over the first nine years. Tax cuts that mainly benefit high-income earners make no sense in an economic landscape where over 90% of the pre-tax income gains from growth in national income have in recent experience gone to the highest-income 10% of households.

    The reluctance of the government to discard or redesign the Stage 3 tax cuts is attributed by some to the Labor Party’s pre-election commitments. It remains that the tick boxes for good governance do not include steadfast adherence to suboptimal policy positions. Overseeing regressive tax cuts, while being unwilling to meaningfully improve the lot of the least well-off, has those principles back-to-front.

    Dr Brett Fiebiger is a post-Keynesian economist. His research focuses on macroeconomic policy, growth theory and income distribution.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • The Reserve Bank’s decision to raise rates shows a total lack of coherency

    The Reserve Bank’s decision to raise rates shows a total lack of coherency

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 3, 2023

    Wages growth is rising slowly and inflation is falling faster than expected, and yet the RBA decided to hit the economy again with another rate rise.

    Yesterday the Reserve Bank shocked markets and most economists by raising the cash rate to 3.85%. But it didn’t just contradict outside observers, it contradicted the views of the RBA board just one month ago when it decided to keep rates steady.

    Policy director Greg Jericho, writes in his Guardian Australia column that in the month since the April RBA meeting data on inflation has suggested faster than anticipated slowing, the economy overall is now expected to slow more quickly, and there is no sign of long-term wages growth rising beyond what would be consistent with 3% inflation.

    And yet despite this, the board decided to raise rates.

    The decision smacks of a board reacting less to economic conditions and more to the recent Review of the RBA which recommended taking the decisions to change rates away from the current board.

    The Reserve Bank suggested a month ago it needed time to pause and review. Nothing in the intervening time has suggested they made a mistake in not continuing to raise rate, and yet the bank seems determined to slow the economy and raise unemployment to 4.5%.

    The bank is so beholden to neo-liberal views of the non-accelerating inflation rate of unemployment that it is determined to keep raising rates until unemployment rises to a level it believes is “full employment”.

    We know the current level of inflation is largely driven by corporate profits and some overhang of supply-side issues and savings from the pandemic/lockdown period. At no point is there any sign that wages are rising in a manner that is fueling inflation and yet the RBA continues to attack inflation like we are experiencing the mining boom of the 2000s which saw wages and jobs grow strongly, rather than the current boom which is seeing profits grow exponentially and real wages plunge .


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