Sunday, 16 February 2014
The Labour Market
When people talk about the labour market being re-regulated under Labor they never present any evidence.
You would see it in three areas.
First wage increases would be higher in a re-regulated labour market.
So here is a graph of wage inflation in Australia from the latest IMF report courtesy of ricardian ambivalence. ( You should be reading him he is very good.)
Do you notice any difference?
No neither does the RBA otherwise they would be raising rates !
this is from their latest Statement on Monetary Policy
'Wage growth slowed further in the September quarter. The wage price index increased by 2.7 per cent in year-ended terms, which is around 1 percentage point below its average of the past decade. The pronounced slowing in wage growth over the past year reflects the effect of spare capacity
in the labour market, combined with relatively low consumer and union inflation expectations and
continuing pressures on firms and public sector employers to contain costs'
We would also see in in higher than usual unemployment given where we are at in the business cycle.
This is related to the above graph and as yet no-one but no-one has shown this to be the case.
We would also see it in higher industrial disputation and again there is nothing to see.
Lastly I do find it highly ironic people try to argue two things simultaneously.
Trade unions have lost a lot of members and therefore power yet they can somehow artificially raise wages beyond where they should be given the business cycle.