Lower penalties mean more jobs

Comments on Ross Gittins “Don't be sure lower penalties mean more jobs” 10/08/2015

Yes Ross, you have a point in that the general equilibrium effects may be much smaller than the partial effects to those businesses that may open longer or start to open on weekends than otherwise. 

Notwithstanding your point, there is likely to be some net positive or benefiting effects, even though it is difficult to estimate the net effects.

Productivity, inflation and wage growth

Comments on Peter Anderson “Wages policy undermines productivity quest”, 11/01/2011, http://www.theaustralian.com.au/news/opinion/wages-policy-undermines-the-productivity-quest/story-e6frg6zo-1225985225840

While I agree with the notion that wages growth should be in line with the growth of productivity, I find the following paragraph from the post confusing:

"Our annual productivity growth at present stands at 1.1 per cent. This is half of the average during the 90s. Wages are rising three to four times faster than productivity. Across the longer term, that is not sustainable."

Let me start with last sentence. Wages growth is nominal that is inclusive the effects of both productivity and prices change of inflation. Anderson's statement did not mention how inflation was, and that makes it unclear whether the wages growth of 3 to 4 times faster is too fast or not.

Secondly, the differences in productivity growth between now and the average of the 90s can be the effects of many factors, including both domestic and international influences. For example, if the world productivity, especially the industrialised economies also has similar differences, then our productivity slow down may not necessarily a purely domestic issue.

Thirdly, there should be a balance between productivity agenda, as important as it is, and other equally agendas, such as proper, legitimate protection of labour rights.

PS: Further, the growth of labour supply can also be an influence on productivity, other things equal. Labour supply is affected by population growth and participation rate. Population growth is also affected by immigration.

Balance jobs and low wages

Comments on Michael Stutchbury “Old IR tribunals don’t work”, 31/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/old_ir_tribunals_dont_work/

Michael, while there is some logic in maintaining the minimum wages level unchanged by the Fair Pay Commission, there is also logic in the 2.8% increase for low paid by NSW Industrial Relations Commission. It is a matter of balance, and views of course.

You applauded the FPC decision and criticises NSW IRC decision. That is understandable, but wrong.

Just think about this question, if it will reduce the welfares of 1000 low paid workers to keep or increase 1 job, is it still good enough from public policy point of view?

Besides, what if all other wages than the minimum wage increase? Is it fair for the lowest paid?

Further, there is also a responsibility for employers to be fair and share some costs of bad times.

Yes, it would be always good to keep as many people work as possible and it is beneficial, but one has to recognise there are costs of doing it and balance the costs and benefits.

To argue just purely for jobs at no costs is not good enough.

Fair minimum wage again - distinction from welfare

Comments on Michael Stutchbury ” Swan and Gillard lesson”, 9/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/swan_and_gillard_lesson/

Michael, while I argued against the freeze of federal minimum wage yesterday, you have a point in arguing that the Australian minimum wage is high by international standards and relative to average wages, if they are true.

There should be a balance between the minimum wage and average wage. If it is relatively too high in Australia compared to international standards, then there is a case for a slower increase in the minimum wage.

At the same time, there should be a clear distinction between paid work and pure welfare be sufficient incentives for people to work as compared to receiving welfare.

A culture of hard working if one can is invaluable and should be encouraged. Paid workers should be better off than welfare dependents.

Minimum wage needs to be fair

Comments on Michael Stutchbury “Harper’s ruling will save thousands”, 8/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/harpers_ruling_will_save_thousands/

The determination of the legal minimum wage for the lowest paid should always be a fine balance act, and especially so at the time of a recession or economic down turn.

However, that does not mean that a wage freeze for those lowest paid is right even for the current circumstances. The following argument by the author is disturbing:

“Since it began in 2006, the FPC has maintained the minimum wage floor in real or after-inflation terms. And this has been topped up by higher family payments, low-income tax offsets and now the budget stimulus handouts.”

If that is true, it means there has no increase in wage for any productivity gains during that period. That is hardly a fair outcome for those lowest paid workers.

One argument may be that there has no productivity gain since 2006 by those lowest paid workers. While that may be true, it needs to be proven.

To trade off a justifiable right wage structure with low-income tax offsets was not a good policy. It does not encourage people to work and get compensated through wage earnings. It encourages a welfare dependent culture. It also distorts tax structure and tax on other people more heavily than it should.

Of course, the current government’s act is also condemnable. It does not have the courage to say how much the lowest wage should be increased. It is not good enough for a government and its ministers to say a considered increase without specifying the degree or quantum, and then complaining the outcome of the Fair Pay Commission’s decision afterwards.

The government should make its stance clear. It is up to the Commission to decide what the best outcome should be and is after considering every side and taking account the circumstances. Everyone has a job to do. The government cannot be opportunistic.