Australian Economic Trends 2023 – A “Fair Go”?
Written by: (Contributed) on 31 May 2023
(Above: Photo by Chris Devers Creative Commons Flickr)
Information emerging from reliable sources has revealed a looming crisis in Australia: forty years of economic rationalism has produced a dysfunctional economy based on short-term profit, with little resilience or sustainability.
The problem has been exacerbated by political spin and carefully edited statements from government departments and private business intelligence bodies to hide the deep-rooted economic malaise. The business model has also been accompanied by standard management practices which, at best, can be aptly described as questionable; at worst, they are frequently illegal.
In mid-May a business report noted the Australian economy was 7.2 per cent bigger than at the start of the pandemic in December, 2019. (1) Taking the problems of the pandemic period the report, at face value, made an interesting read. Reading between the lines, however, economic developments are not what they appear; 6.5 per cent of the increased size of the economy was explained by Australians working more hours than before 2019. (2)
The price / profit inflation which has become a major problem in Australia during the past couple of years has eaten into household budgets with declining living standards. Inflation was virtually zero in 2020, in December last year it reached eight per cent. (3) The figures are all the more appalling when taking other detailed statistical records: the noted cost of living for an employee house has increased by 9.6 per cent during the past twelve months. By the end of the year the Reserve Bank of Australia has forecast mortgage repayments will reach 9.9 per cent of disposable income. (4) Increased costs of basic food items have reached a peak of 9.6 per cent in April. (5) Workers, in present day Australia, are now more inclined to work overtime or even have second jobs to make ends meet.
The outcome of forty years of economic rationalism has not produced a stable economic environment. In fact, present day Australia has become increasingly unstable. Massive discrepancies in distribution of income have been recorded elsewhere: Australian company tax receipts have risen from $123.3 billion in 2021-22 year to a forecast $190.2 billion by 2026-27. (6)
Company profits, however, remain based on rampant levels of exploitation and inside the sphere of financial speculation in an economy increasingly resembling a casino. Recorded levels of GDP growth, the only accurate economic criteria for studying the health of an economy, nevertheless, remain continually slow. During the early 1960s, for example, GDP growth rates hovered around seven per cent, by the early 2020s it averaged a dismal two per cent. (7) If the trend is continued into the next decade GDP growth rates are likely to sink to zero, heralding serious economic problems and crisis.
A recent study of the building trades found an increasing number of businesses already failing: there have been fifty per cent more failures in 2022-23 than the previous year. (8) A trend has been established due to increased interest rates and operating costs.
During the early days of economic rationalism political spin and media releases from government departments were quick to push the business model: the years of the Howard coalition governments were a prime example. A race-to-the-bottom mentality of cost-cutting was accompanied by anti-trade union legislation designed specifically to undermine awards and workplace agreements and boost company profits with master-and-servant style industrial relations procedures. Their praise of so-called free enterprise was little other than a massive cover for dubious and often illegal behaviour: one noted feature of the business model has been the rampant casualisation of work.
Taking the Australian workforce as composed of about 13 million, a participation rate of about 66 per cent has given an actual workforce of about 8.5 million in full-time equivalents. Research conducted by the ACTU has established that close to 2.6 million Australian workers are casuals, meaning over thirty per cent of the present-day workforce are without paid holidays, sick-leave and other entitlements. (9) Casualisation, furthermore, has been used by employers to systematically undermine trade-union organisation and worker's bargaining power, while pushing up company profits.
The ACTU report also noted a large discrepancy between hourly pay rates between casual workers and those in permanent employment, growing to 28 per cent: a national average has shown casual workers earn $11.59 per hour less than their permanent counterparts, with $28.95 per hour to $40.54 per hour. (10) Such developments are best viewed along lines of the business classes forcing wage rates down, with no concern for the under-dog.
Australia also has a major problem with wage-theft; it is an integral part of the economic rationalist business model. A recent study found underpayment of Australian workers and unpaid Super was in excess of $6 billion a year. (11) When viewed in the context of the actual size of the Australian workforce of about 8.5 million, the problem is widespread.
New immigrants into Australia are the prime target for unscrupulous employers: a recent study found up to sixteen per cent of recent arrivals are paid less than the national minimum wage and are twice as likely to be exploited than longer term residents. (12) The report also found forty per cent of recent migrants were more likely to be underpaid than longer-term workers with the same skills and expertise, and eight per cent of recent arrivals were being underpaid at least three dollars per. (13) When taken in the context of the size of the recent immigrant workforce as being well over one million recent arrivals on temporary visas from a total of 8.5 million, the problem is clearly not a peripheral issue.
Economic rationalism runs counter to Australia being a lucky country with a fair go for all!
1. Pandemic accentuates problem of our productivity flatlining, Australian, 22 May 2023.
3. Statistical Report, Annual Wage Review, 2022-23, The Fair Work Commission, page 41.
4. Young who borrowed low and paid high cop the crunch, Australian, 17 May 2023.
5. More pain as food inflation reaches 9.6 per cent, Australian, 23 May 2023.
6. Tax bonanza but slower growth ahead, Australian, 10 May 2023; and, Survival of the Richest, Oxfam, 16 January 2023.
7. GDP growth rates – Australia, The World Bank; and, Australia – GDP growth rates, 1961-2023, Macrotrends.
8. No worse time for IR reforms: builder, Australian, 24 May 2023.
9. Casual pay gaps at record levels, Australian, 23 May 2023.
11. Senate inquiry calls for laws to stamp out ‘systematic sustained and shameful’ wage theft. ABC News, 30 March 2022.
12. New migrants the key victims of wage theft, Australian, 24 May 2023.
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