It’s Wednesday and I’m doing three live demos throughout the day. So today we will briefly introduce it. The Australian Bureau of Statistics today released its latest wage price index, which showed Australia’s annual wage growth rate of 2.3 per cent, compared with the official inflation rate of 3.5 per cent. I’ll analyze the data in detail tomorrow, as I don’t have much time today. But last week the UK also released troubling wage data, reflecting a serious imbalance in priorities and also telling me that there is no wage demand driving the current inflationary event.
Wage data shows alarming lack of priorities
The situation in Australia is bad enough, with workers forced to cut real wages due to a lack of nominal wage growth.
Wage caps implemented by the public sector at the federal and state levels continued to weigh on wage growth. Wages for utility workers can only rise by 1.3% a year.
In addition, the education sector recorded only a 0.3% quarterly increase.
As a result, workers will struggle to maintain a real standard of living for at least the next 12 months due to uncompetitive cartel behavior and now the situation in Russia, which has led to soaring energy prices.
The situation in the UK is even worse.
The Office for National Statistics released the latest wage data on 15 February 2022 – Average Weekly Earnings in the UK: Feb 2022.
ONS states:
Average weekly earnings measure how much money employers pay to UK employees before tax and other payroll deductions are deducted. These estimates are not just a measure of salary increases, as they also reflect, for example, changes in the overall structure of the workforce.More high-paying jobs in the economy will have an upward impact on income growth
From October 2021 to December 2021, employees’ average gross salary (including bonuses) increased by 4.3%, and regular salary (excluding bonuses) increased by 3.7%.
ONS also states:
In real terms (adjusted for inflation), between October 2021 and December 2021, gross wages and regular wages fell year-on-year, with gross wages at -0.1% and regular wages at -0.8%.
In terms of monthly changes, real average weekly earnings “decreased year-over-year in both November 2021 and December 2021, by negative 1.0% and negative 1.2%, respectively.”
As a result, the overall pay situation for UK workers does not look good.
The chart below shows the annual growth rate and inflation rate of nominal fixed wages. When inflation is higher than wage growth, it means real wages are falling.
But when we dig deeper, there are some very disturbing aspects to this data release.
First, in the 12 months to December 2021, the average wage in the private sector was 4.6%, compared to just 2.6% in the public sector.
Second, if we examine industry growth patterns, we find quite troubling results beneath the aggregate results.
The chart below shows the annual growth rate of real wages by industry through December 2021.
Fire department activities have experienced very strong real wage growth, although many of these jobs have been in vain.
Nominal wages for workers in the financial and insurance services sector rose by 21.5% in the 12 months to December 2021, with about 30% of that in the form of bonuses for City bankers.
In stark contrast – especially during the pandemic – health and social work workers – have seen their real pay cuts.
It’s a similar story for those working in education, the arts, entertainment and entertainment, and other industries that have taken real pay cuts.
Regular readers will know that I advocate for massive increases in wages for cleaners, health professionals (excluding doctors), and other workers who actually make our lives safer and more valuable.
I’ll cut salaries in banking and other FIRE occupations – quite significantly.
The data tells me a few things:
1. The priorities are all wrong.
2. The Bank of England governor’s call for lower wages is apparently only for his own department (joke), which I wrote about in this blog post – Bank of England governor hasn’t done enough (February 8, 2022).
3. The absence of increased wage pressures could turn this temporary inflationary event into something more structural and difficult to manage.
Our edX MOOC – Modern Monetary Theory: 21st Century Economics Continues
Week 3 starts today with our 4-week MMTed/Newcastle University edX MOOC.
The course is free for 4 weeks and offers new material every Wednesday.
It’s not too late to sign up and be part of an already large class. You need to put in about 2 hours per week so you can still catch up if you want to.
Get a proper understanding of MMT with tons of videos, discussions, and more.
Today we have the first of two live events as part of the curriculum, which is an add-on this year.
There will be two one-hour sessions available for students today.
So even if you completed the course last year, these live events may be a reason to register again.
More details:
https://edx.org/course/modern-monetary-theory-economics-for-the-21st-century
If you want to take a class, do so early to avoid catching up.
welcome everybody.
Music – The Human Condition
Here’s what I’ve been listening to this morning at work.
I dug the bass line out of my head this morning when I was out for a run very early before work.
I can’t shake it, so I guess it must be a sign.
This is from the great- hot canned – From their 2005 album “The Very Best of Canned Heat”.
The song – Human Condition – was recorded on July 30, 1970 and originally released on the 1994 Uncanned Compilation (EMI).
it is from– Alan “Blind Owl” Wilson – Tragically, he was a mentally tortured genius who died of an unexpected drug dose on September 3, 1970 at the age of 27.
In a matter of weeks, we lost Alan Wilson, Jimi Hendrix and Janis Joplin—the music giants of their time.
In the song, Alan Wilson reflects on his interactions with a psychiatrist after a suicide attempt.
The lineup at the time was:
1. Bob ‘The Bear’ Hite – vocals/harmonic.
2. Al ‘Bline Owl’ Wilson – vocals, guitar, harmonica.
3. Henry ‘Sunflower’ Vestine – guitar.
4. Antonio de la Barreda – Bass.
5. Adolfo ‘Fito’ De La Parra – Drums.
If you listen to it, it gets stuck in your head.
Enough for today!
(c) Copyright 2022 William Mitchell. all rights reserved.
