Posted: November 15, 2006

Real Wages are falling!

As the High Court effectively terminated the Federal system yesterday and gave the Federal Government power to control almost anything it wants under the Corporations part of the Constitution, back at the ranch, conditions for workers were deteriorating further. The ABS released its Wage Price Index (WPI) today which confirms that real wages for the average worker are now falling. The following table shows why. The WPI provides data on Total hourly rates of pay excluding bonuses (and the data in the table is seasonally Adjusted). The bottom row in the table shows the Consumer Price Index (CPI) growth over the corresponding periods. For a private sector worker already facing rising petrol prices, rising interest rates, and being squeezed by the Federal Budget surplus, the reality is that your real purchasing power through the pay packet is also declining.

Table 1 Growth in Wage Price Index

Sector	Jun Qtr 2006 to Sep Qtr 2006	Sep Qtr 2005 to Sep Qtr 2006
	per cent	per cent
Australia	0.8	3.8
Private Sector	0.7	3.8
Public Sector	1.0	4.2
CPI All groups	0.9	3.9

While this might stop another interest rate rise in the short-run it will further undermine the living standards of the workers. A related piece of data this week was the release of consumer sentiment data showing it plunging towards recession level values.

My reaction to the High Court ruling yesterday: What goes around comes around!! Wait for a progressive social democratically-inclined Federal government to be elected and then it will be able to implement comprehensive prices and incomes control, including setting up an Unfair Pay Commission to impose maximum executive wages growth. That is what the ruling could allow. The Whitlam Government sought to do both things via Constitutional change when it could have used the power it already had under the Corporations sections.

Blog entry posted by bill