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  • Increasing JobSeeker is possible, it’s just a question of priorities

    Increasing JobSeeker is possible, it’s just a question of priorities

    by Greg Jericho

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    The government has the power to make significant and long-awaited improvements to the JobSeeker scheme in this federal budget, but it has to make it a priority, says Greg Jericho.

    The federal government’s hand-picked Economic Inclusion Advisory Committee has called for a significant increase to the JobSeeker unemployment payment, describing the current rate as “seriously inadequate”.

    While the aged pension has increased over time, JobSeeker has stagnated for decades, dragging people without a job well below the poverty line, Australia Institute Chief Economist Greg Jericho said on the latest episode of Dollars & Sense.

    Currently worth less than 70 per cent of the aged pension, JobSeeker payments should be increased to 90 per cent, according to the Committee.

    The significant disparity between the two payments is the result of a policy decision by the Howard government, Jericho explained.

    “What John Howard did was change how [JobSeeker and the aged pension] were indexed,” Jericho said.

    “He linked the aged pension – but not unemployment benefits – to average, full-time, male earnings.

    “In a sense, what [Howard] was saying was, ‘those people on that government benefit, they’re worthy – these people on unemployment benefits, not worthy.

    “We’ve always had people talking about ‘dole bludgers’…[but Howard] made that view government policy.”

    In considering the Committee’s recommendations, the federal government faces a question around where its priorities lie, Jericho said.

    “It’s going to cost around $4.6 billion a year, but this is where it comes back to choices.

    “Josh Frydenberg was quoted as saying, back when they were talking about AUKUS, that everything is affordable if it’s a priority. Julia Gillard made a speech in 2014 where she said budgets are made of choices.

    “If something is a priority, they find the money.”

    Dollars & Sense is available on Apple Podcasts, Google Podcasts, Spotify or wherever you get your podcasts.


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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

  • Who’s hurting most from rising interest rates? It’s probably you.

    Who’s hurting most from rising interest rates? It’s probably you.

    by Greg Jericho

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    Soaring house prices, high household debt and the pervasiveness of variable rate home loans mean that Australians bear the brunt of interest rate rises, says Greg Jericho.

    A new report by International Monetary Fund (IMF) shows rising interest rates bite harder in some countries than others – and it’s grim reading for Australian mortgage holders.

    Globally, repayments have become increasingly difficult to meet on the back of rapid rate increases.

    But the new IMF World Economic Outlook report shows that rate rises hurt Australians the most.

    “It mightn’t come us a surprise too many Australians, but we are right at the top – we’re number one,” Australia Institute Chief Economist Greg Jericho said on the latest episode of Dollars & Sense.

    “What it’s saying is that, if interest rates went up – let’s say by one per cent in every advanced economy in the world – Australians would feel that the most.”

    The prevalence of variable home loans in Australia is one of the reasons rate increases are hitting harder, according to the IMF.

    “In Australia, around 85 per cent of people with a mortgage have a variable rate of some kind. That’s actually really unusual,” Jericho said.

    “In the United States, 95 per cent of people with a home loan have a fixed rate mortgage. In the United Kingdom, it’s 85 per cent.

    “If you’ve got a 30-year fixed rate mortgage, you really don’t care what the Reserve Bank does.”

    Other drivers identified by the IMF include high levels of household debt and looser lending guidelines, but Jericho said that soaring house prices also play a big role.

    Since 2005, median house prices have gone up by 86 per cent globally, but Jericho’s analysis shows that prices have gone up 162 per cent in Australia over the same period.

    “So, just a little bit different.

    “I think you can make a pretty good case…that we have some damned expensive houses.

    “Things have really taken a turn for the worse over the past five, 10, 15 years – nearly 20 years really.”

    As for what the Reserve Bank of Australia might do from here, the market is predicting cuts over the next 12 months, but that might be optimistic, according to Jericho.

    “If Australians are hurt more by interest rate rises than elsewhere, it means they also get the benefit of rate cuts more than elsewhere.

    “So the Reserve Bank might be inclined to go, ‘yeah, let’s just wait and see’.”

    Dollars & Sense is available on Apple Podcasts, Google Podcasts, Spotify or wherever you get your podcasts.


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  • Video: The Right to Disconnect is NOT Bad for Productivity

    Video: The Right to Disconnect is NOT Bad for Productivity

    by Jim Stanford

    Jim Stanford

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    The Right to Disconnect legislation being passed recently has attracted criticism from Opposition leader Peter Dutton and business groups, who say it’s bad for productivity.

    They may need to learn some basic maths, because they couldn’t be more wrong.

    Centre for Future Work Director Dr Jim Stanford explains.

    Research indicates the average Australian worker performs 280 hours of unpaid overtime per year, equating to more than $130 billion across the labour market.

    The new legislation’s ‘reasonableness’ test still grants employers great scope to contact workers out of hours when it is genuinely necessary.

    Nevertheless, merely affirming that workers don’t need to be on call 24-7, and should be allowed to turn off their devices after work, has sparked loud complaints from old-school guardians of work attitudes.

    Read more in this article: https://australiainstitute.org.au/post/the-big-error-at-heart-of-right-to-disconnect-opposition/


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  • Australia’s “stupid” surplus obsession must end

    Australia’s “stupid” surplus obsession must end

    by Greg Jericho

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    A budget surplus doesn’t mean a government is good at running the economy – we should focus on the choices they make instead, says Greg Jericho.

    Australian governments like to brag about their big budget surpluses — one even slapped it on a mug — but they aren’t all they’re cracked up to be, according to Chief Economist at the Australia Institute, Greg Jericho.

    “I think the discussion about budget surpluses and deficits is quite stupid, to be blunt,” he said on the latest episode of Dollars & Sense.

    The accuracy of budget projections is highly dependent on commodity prices, international economic conditions and other factors outside a government’s control, making them notoriously difficult to get right.

    “It’s a fairly complicated thing, the Australian economy. There are lots of moving parts and they never get it right,” Jericho said.

    “Last year, in the May budget, there were essentially two months to go in the 2022-23 financial year, so you’d think they can’t get the figure that wrong. Treasury estimated that the budget was going to be in surplus by $4 billion.

    “When we got complete figures in September…they found out, no — it wasn’t $4 billion, it was $22 billion!

    “If they can be that wrong with two months to go, think how wrong they can be 12 months ahead, four years ahead.”

    Jericho said it’s “absurd” to suggest a surplus or deficit alone reveals if a government is managing the economy effectively.

    “It started with Paul Keating and then Peter Costello really set fire to it because he was Treasurer during a massive mining boom, where there were masses of tax revenue coming in, making it very easy to be in a surplus.

    “He wanted to be able to sell that as being really good and he was this great economic manager.”

    But like household debt, a national deficit can be good if used to invest in the future, Jericho argued.

    “What if that deficit was used to build a hospital?

    “Our children, and our children’s children, are going to be using that hospital — would you prefer they didn’t build it?

    It’s not just about expenditure, he said, because budgets also reflect a government’s priorities in how it raises revenue.

    “Let’s say we raised $5 billion more from the Petroleum Resources Rent Tax — that means we could reduce the tax on individuals by $5 billion with no change in the budget balance.

    “Or we could spend that money on health or education.

    “Budgets are very much about choices.”

    Dollars & Sense is available on Spotify, Apple Podcasts, Google Podcasts or wherever you get your podcasts.


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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

  • “It’s a scare campaign”: award wage rise won’t trigger inflation spiral

    “It’s a scare campaign”: award wage rise won’t trigger inflation spiral

    by Greg Jericho

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    With unions calling for a five per cent increase to award wages, business groups are crying wolf over the proposal’s impact on inflation and unemployment, says Greg Jericho.

    The call from the Australian Council of Trade Unions (ACTU) comes after the Fair Work Commission announced a 23 per cent pay increase for aged care workers, a decision Jericho – Chief Economist at the Australia Institute and Centre for Future Work –  said will bring the award up to around $63,000 per year.

    “It’s incredibly vital work, it’s a growing sector and there are massive shortages,” he said on the latest episode of the Dollars & Sense podcast.

    “One of the reasons there are these shortages is that [workers] are paid bugger all.”

    “And while I still think they are chronically underpaid, especially for how important the role is…at least there is some good news.”

    Business groups and commentators have argued that the ACTU’s proposal will send inflation and unemployment soaring, but Jericho said those claims don’t stack up.

    “Last year, when we had the award go up by 5.75 per cent and the minimum wage go up by 8.6 per cent – again we’re told this is the end of times.

    “The most recent unemployment figures, as we saw last week? They fell!”

    Far from being a sign of runaway wage growth, Jericho’s analysis shows that a five per cent increase would only get real wages back to where they were in 2020.

    The two per cent increase proposed by the Australian Chamber of Commerce and Industry (ACCI) would not only leave workers on an award well short of that mark, but also falling further behind inflation, which was 3.4 per cent in the 12 months to February.

    “Wages should go up more than inflation. Wages should go up more than prices,” said Jericho.

    “If you can’t buy more with your wage than you did a year ago then your living standards haven’t gone up.”

    While increasing wages can theoretically lead to greater demand and rising inflation, the reality is that, for decades, wage increases in Australia haven’t been anywhere near enough to set off inflation, he said.

    Australia Institute research found that, between 2019 and 2022, corporate profits contributed far more than wage rises to the rapid rise in inflation.

    “I can recall then-Senator Eric Abetz…during the Rudd-Gillard years saying we were about to have a wages breakout and then we went on a decade-long run of ever lower wages.

    “It’s a scare campaign.”

    Dollars & Sense is available on Apple Podcasts, Google Podcasts, Spotify or wherever you get your podcasts.


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  • The RBA should keep its finger off the interest rate trigger

    The RBA should keep its finger off the interest rate trigger

    by Greg Jericho

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    With unemployment tumbling in February, the Reserve Bank of Australia (RBA) should resist the urge to raise interest rates, says Australia Institute Chief Economist Greg Jericho.

    Unemployment fell dramatically in February, defying the expectations of many policymakers and economists.

    While the RBA has genuinely seen low unemployment as a key driver of inflation, Jericho said their belief is misguided.

    “The Reserve Bank, we know, has this belief that unemployment needs to rise to lower inflation,” he said on the latest episode of the Dollars & Sense podcast.

    “We here at the Australia Institute and Centre for Future Work have been saying, ‘no, that’s completely wrong’.

    “Inflation has not been rising and falling because there’s more or less unemployment in the system – it was because of what has been happening on the supply side, what’s happening with corporate profits.”

    This view was supported by a 2023 report from the Organization for Economic Cooperation and Development (OECD), which found that high corporate profits was a more significant factor in driving inflation after the Covid-19 pandemic than wages.

    “Stop trying to put people out of work just to get inflation down. It’s a stupid thing to do,” said Jericho.

    “And, actually, these figures kind of confirm that.

    “Inflation has been slowing and what have we seen? Unemployment drop!”

    The drop in the seasonally adjusted jobless rate, from 4.1 to 3.7 per cent, means roughly 116,000 additional Australians were in work in February. This represents the single biggest improvement since the early 2000s, outside the core years of the pandemic.

    The next interest rate decision will be handed down by the RBA on 7 May.

    Dollars & Sense is available on Apple Podcasts, Spotify, Pocket Casts, Google Podcasts or wherever you get your podcasts.


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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

  • Increasing minimum wage would not drive inflation up: new report

    Increasing minimum wage would not drive inflation up: new report

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    A significant increase to the minimum wage, and accompanying increases to award rates, would not have a significant effect on inflation, according to new analysis by the Centre for Future Work at the Australia Institute.

    The analysis, The Irrelevance of Minimum Wages to Future Inflation, examines the correlation between minimum wage increases and inflation going back to 1997.

    It finds that, contrary to employer concerns, there is no consistent link between minimum wage increases and inflation in the modern Australian context.

    The report finds that a minimum wage rise of between five and 10 per cent in the Fair Work’s Annual Wage Review, due in June, is needed to restore the real buying power of low-paid workers to pre-pandemic trends, but would not significantly affect headline inflation.

    Key points:

    • Last year’s decision, which lifted the minimum wage by 8.65 per cent and other award wages by 5.75 per cent, offset some but not all of the effects of recent inflation on real earnings for low-wage workers.
    • At the same time, inflation fell by 3 full percentage points.
    • There has been no significant correlation between rises in the minimum wage and inflation since 1997.
    • Raising wages by 5 to 10 per cent this year would offset recent inflation and restore the pre-pandemic trend in real wages for award-covered workers.
    • Even if fully passed on by employers, higher award wages would have no significant impact on economy-wide prices.
    • A 10 per cent increase in award wages could be fully offset, with no impact on prices at all, by just a 2 per cent reduction in corporate profits – still leaving profits far above historical levels.

    “Australia’s lowest paid workers have been hardest hit by inflation since Covid. There is a moral imperative to restore quality of life for these Australians and this analysis shows that there is no credible economic reason to deny them,” Australia Institute and Centre for Future Work Chief Economist Greg Jericho said.

    “It’s vital the Fair Work Commission ensure that the minimum wage not only keeps up with inflation, but also grows gradually in real terms – as was the trend before the pandemic.

    “Whenever wages go up, the business lobby cries wolf, claiming it will cost people their jobs, shutter businesses and stifle competition.

    “The business lobby always has some reason that wages should be suppressed. But the historical data prove that concerns about inflation are not a credible excuse to deny low-paid workers a much-needed pay rise.

    “Even if businesses respond to minimum wage rises by charging consumers more, it would have a minuscule effect on inflation because it would be subsumed by much larger factors including chain disruptions, energy shocks, and corporate profits.”


    Related research



    The Irrelevance of Minimum Wages to Future Inflation



    Full report

  • The Irrelevance of Minimum Wages to Future Inflation

    Labour Standards & Workers’ Rights, Macroeconomics, Unions & Collective Bargaining

    The Irrelevance of Minimum Wages to Future Inflation

    Minimum and award wages should grow by 5 to 10 per cent this year
    by Jim Stanford and Greg Jericho

    Authors

    Jim Stanford

    Greg Jericho

    Chief Economist

    Media release



    Increasing minimum wage would not drive inflation up: new report

    A significant increase to the minimum wage, and accompanying increases to award rates, would not have a significant effect on inflation, according to new analysis by the Centre for Future Work at the Australia Institute.
    The analysis examines the correlation between minimum wage increases and inflation going back to 1997, and it finds no consistent link between minimum wage increases and inflation.

    The report, co-authored by Greg Jericho (Policy Director) and Jim Stanford (Director), finds that a minimum wage rise of between five and 10 per cent in the Fair Work’s Annual Wage Review, due in June, is needed to restore the real buying power of low-paid workers to pre-pandemic trends, but would not significantly affect headline inflation.

    Key findings of the report include:

    • Last year’s decision, which lifted the minimum wage by 8.65 per cent and other award wages by 5.75 per cent, offset some but not all of the effects of recent inflation on real earnings for low-wage workers.
    • At the same time, inflation fell by 3 full percentage points.
    • There has been no significant correlation between rises in the minimum wage and inflation since 1997.
    • Raising wages by 5 to 10 per cent this year would offset recent inflation and restore the pre-pandemic trend in real wages for award-covered workers.
    • Even if fully passed on by employers, higher award wages would have no significant impact on economy-wide prices.
    • A 10 per cent increase in award wages could be fully offset, with no impact on prices at all, by just a 2 per cent reduction in corporate profits – still leaving profits far above historical levels.

    “Australia’s lowest paid workers have been hardest hit by inflation since Covid. There is a moral imperative to restore quality of life for these Australians and this analysis shows that there is no credible economic reason to deny them,” Jericho said.

    “It’s vital the Fair Work Commission ensure that the minimum wage not only keeps up with inflation, but also grows gradually in real terms – as was the trend before the pandemic.



    Full report




    Factsheet
    Increasing minimum wage would not drive inflation up: new report

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  • Submission to the Reserve Bank Reforms 2023 bill

    Macroeconomics

    Submission to the Reserve Bank Reforms 2023 bill

    by Matt Grudnoff

    Author

    Matt Grudnoff

    Senior Economist

    The Australia Institute argued that the RBA review’s proposal to remove the Australian Parliament’s power to override the RBA on monetary policy is wrong.

    In Australia’s democracy ultimate responsibility for something as important as monetary policy should rest with the parliament. This is because the Australian Parliament is ultimately responsible to the Australian people, while the RBA board is not.



    Full Submission




    Factsheet
    Chalmers is right, the RBA has smashed the economy

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  • Fixing the work and care crisis means tackling insecure and unpredictable work

    Fixing the work and care crisis means tackling insecure and unpredictable work

    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 March 8, 2024

    The Fair Work Commission is examining how to reduce insecurity and unpredictability in part-time and casual work to help employees better balance work and care.

    The Commission is reviewing modern awards that set out terms and conditions of employment for many working Australians to consider how workplace relations settings in awards impact on work and care. This follows a 2023 finding by the Senate Select Committee Inquiry into Work and Care last year that there is a “work and care crisis”.

    The Select Committee’s final report noted “too many Australians are working in conditions that lack predictable hours and thus pay”, making it difficult to manage their care responsibilities with paid work.

    Insufficient income to meet family needs, inability to plan, inability to access suitable care, high stress levels and lack of time for life are some of the negative impacts of insecure and unpredictable part-time and casual work for workers with caring responsibilities.

    Women are overrepresented in part-time and casual jobs, as they continue to provide most unpaid care for children, elderly parents, and sick or disabled family members. Among women, casual employment is most common among 15 to 34 year-olds, while for men it is highest among those aged 65 years and older. Women’s casual employment is linked to child-rearing.

    Pay rates in casual jobs are often lower than for employees in equivalent permanent part-time and full-time jobs, despite casual loadings. Underemployment is also high and unpredictable working hours are common among casual and part-time employees, including in services sectors such as retail and care. In both sectors, insecure casual jobs provide workers with very little control over their work hours. Lack of control over hours is often a feature of permanent part-time jobs as well as casual jobs

    In a job with unpredictable hours it can be extremely difficult to organise and manage the costs of care. For example, for parents, uncertainty of working hours and income can make access to reliable and affordable childcare impossible. Unpredictable short-hours rosters can make it barely worth working at all as income may not cover the costs of formal childcare.

    Good quality, secure part-time jobs have long been regarded as essential for greater gender equality in employment, including as part-time jobs can support better sharing of care among men and women. However, the expansion of part-time work in the Australian economy since the 1980s has been an expansion of casual and part-time jobs that are highly insecure, often low-paid and with poorer conditions, protections and entitlements than most full-time jobs.

    It is possible to make casual and part-time jobs more secure and predictable. The Fair Work Commission’s analysis of industrial awards shows that there are many provisions in awards applying to part-time and casual employment that contribute to insecurity and lack of predictability. Award provisions include, for example, short minimum payments periods, broken shifts, poor guarantees around minimum and regular hours of work, little or no payment for travel time between different work locations, little or no notice of roster changes and poor compensation for being on-call.

    Secure work and a living wage are fundamental to good work and care arrangements. Secure work doesn’t just mean ongoing work or protection from unfair dismissal. Secure work entails adequate and predictable work hours, reasonable flexibility of working time, compensation for unsocial hours, safety at work and access to union representation.

    Worker-carers should also have rights to carer’s leave and personal leave, regardless of their employment arrangements. Systems of portable leave entitlements could help all workers manage care and work at all stages of their working lives. These and other leave entitlements would have the benefit of supporting a better sharing of care.

    The Fair Work Commission’s will complete its review in the middle of 2024. It is to be hoped that this leads to improved working conditions for worker carers, enabling men and women to care and work without paying the price through job insecurity.


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