Archives for posts with tag: the Australian

Is the Australian labour market today in worse shape than it was during the Great Depression? There were about half a million unemployed people in 1932, at the height of the Depression, but around 730 000 unemployed in January this year. The second number is certainly larger than the first number, so does that mean we’re in sub-Depression territory? Of course it doesn’t. The population is about 4 times larger than it was back then and the labour force is about 4.7 times bigger, so comparing the number of unemployed people today and in 1932 doesn’t really tell you much about the relative health of today’s labour market. There’s a reason why people look at the unemployment rate rather than the number of unemployed people when they want to make comparisons over time.

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This was the front page of our national broadsheet the day after the ALP Government announced a plan to increase the tax on the super contributions of the 128 000 Australians earning over $300 000:

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There are two alternative proposals to increase the tax on superannuation contributions.

  1. The first proposal would raise the tax on superannuation contributions paid by the 128 000 highest-income Australians by 15 percentage points.
  2. The second would increase the tax on super contributions paid by the 3.6 million lowest-paid workers by 15 percentage points.

Which of these proposals would you describe as ‘class war’?

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Three types of blog posts I’m sick of writing, and I’m sure you’re sick of reading, are generic defences of the Fair Work Act, angry screeds against predictable partisanship from The Australian, and basic summaries of labour force data. Yet every time I swear to myself that I’m going to take a break from each of these genres, someone writes something that gets me sufficiently riled up that I feel compelled to respond. John Black’s piece in yesterday’s Oz, titled ‘Workers at the mercy of a jittery economy‘, ticked all the boxes. He uses a highly selective and skewed bundle of labour force data to try to make the case that the Fair Work Act is the cause of rising unemployment. Here’s my response.

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They don’t make wages breakouts like they used to. A few years ago, the much-discussed, never-quite-seen phenomenon apparently amounted to an “economically irrational assault on a scale we have not witnessed for a quarter of a century”. Everywhere you looked, there were harbingers of its imminent arrival – the breakout would be summoned into being by the right to strike, the NBN, or by wage rises in the transport industry or community services. Now the wages breakout seems to amount to a couple of Taragos full of tradies on the North-West shelf.

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The campaign by The Australian newspaper against the Fair Work Act has had a few phases. I’d like to go through a few of their key claims and evaluate them against recent data.

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How would we know if the labour market was ‘flexible’? One way is to look at how the jobs market responds to economic shocks. During the GFC, when the Howard Government’s labour laws were still in effect, the number of hours worked in Australia fell while the number of people in employment didn’t fall.

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David Uren’s piece in the Australian today has some pretty eye-catching figures:

…nobody starts to pay tax until their earnings exceed $18,200, but the Australian Bureau of Statistics shows that 60 per cent of all households receive more in cash benefits than they pay in tax.

A household in the middle 20 per cent of the earnings distribution pays income tax of $143 a week but gets cash social benefits totalling $164. Subsidised health, education and childcare deliver that average household a further $346 a week.

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