Low wage growth
The recent article in the Australian newspaper, Low wage growth a mystery for RBA may be a complete mystery to the RBA but it comes as no surprise to the more than 8% (and growing) number of Australians that are under employed.
Most people consider the unemployment level to be a good indicator of the health of the Australian workforce. Of course, for a range of reasons, not everyone is able, to participate in the workforce.In the past, the rule of thumb was that an unemployment rate of around 5% was considered to be full employment. At that time, the casual and part time workforce in Australia was around 11%.
So by past standards, the most recent unemployment figure of around 5.7%, could be considered reasonably healthy. The seemingly low unemployment level masks the impact to wages caused by increasing casualisation of the workforce. Back in the day, your average worker had a permanent job. Casual work was something that you did when you studied or raised children. However between 1971 and 2016, the number of part time or casual workers in Australia rose dramatically. From around 11% to around 23.7%.
Loss of permanent jobs
Global changes have caused an increased demand for an agile workforce and reduced the need for permanent workers. Many displaced workers end up reskilling or changing industries. However most end up working part time and a lot are forced to work several jobs just to make ends meet. Whilst there are many highly skilled, “in demand” contractors who receive high rates of pay, the overall demand for Australian workers is dropping. Increasing competition is contributing to the low wage growth seen today.
If we follow trends set in the US, casualisation is set to rise from 23.7% to over 40% of the workforce in the next 6 years. Unless drastic changes happen, we are going to lose over 4 million permanent jobs in Australia.