what we know is we had low wages growth when we had high immigration and we've
still got low wages growth now that we've got low immigration so immigration
can't be the main variable uh that's determining wage growth in australia
all right the question we have today is what impact does immigration have on wages
well what a good question so big picture wages growth in australia is at record lows
it was at record lows before covert hit and it's a record lows now uh and we need to understand the
big picture of what's been going on for 30 years governments and industry have worked hard to push
wages down for 30 years we've been told that high wages make us uncompetitive and high wages cause
inflation and high wages bad low wages good well guess what you know we succeeded we broke the back
of wage growth in australia we've now got the lowest wage growth in history and we've got you
know people as radical as the reserve bank saying low wage growth is now a problem for the economy
so step one in looking at current levels of low wage growth we have to look at it over a long
period of time we've got really low wage growth now because powerful people have spent decades
trying to achieve that and sort of like like the dog that finally caught the car it was chasing
having having achieved the goal of low wage growth turns out that the muffler doesn't taste very nice
the the second point is that we're in the middle of a bit of a natural experiment because some
people often think that low wages were caused by uh by immigration for example but here we are with
very low levels of immigration thanks to covert but guess what still got very low wages growth
so so what we know is we had low wages growth when we had high immigration and we've still got low
wages growth now that we've got low immigration so immigration can't be the main variable
that's determining wage growth in australia all right so firstly let's have a quick look
at wage growth data our first graph here i've basically got the increase in wages since 2000
so there's about 21 years of data here and i have these two black lines and the black line
from 2000 to about 2014 is the average over that period and we can see that per quarter it's about
0.7 percent or just over actually it's almost 0.8 so that's just over um three and a half
percent it's about 3.6 percent per annum okay which has been the average um for most of the
time up until recently but then if we look from about 2014 onwards we can see that the black line
drops dramatically and the average since 2014 has only been about 0.5 um or 0.6 per quarter
did anything happen around 2014 matter yeah there was an election in 2013 i seem to remember and the
coalition came to power at that particular point and basically wages have collapsed
um and you know if we if we're talking about uh 0.40 uh 0.5 0.6 per quarter then we're talking
about at just over two percent annual and so what we can see from the data is is that average
wages have come down quite dramatically and have stayed down over the last kind of eight years of
the current government and we can see right at the end there there's some particularly low quarters
which was the beginning of the pandemic in the the beginning of 2020 there's a couple of quarters
that are still pretty low and then the most recent quarter has dropped back down again so during the
time when we've had quite low um immigration we haven't seen wages massively increased quite the
opposite they've actually come down even more and so it's clear that immigration isn't one of
the major factors driving wages growth yeah so and and to be clear that what we're what we're seeing
here at the moment is wage growth that's way way below what the reserve bank wants it to be the
low wage growth is is actually a problem for the economy and economists have always and probably
will always argue about what does and doesn't cause wage growth but immigration plays a really
important and interesting and complicated role because on the one hand everyone who shows up
is is a is a new form of supply to the labor market and when we increase the supply of
something then we often expect to see prices or wages fall but of course everyone that shows
up is also a new customer who buys stuff so they're creating demand in the economy
and when demand increases then that drags prices up so so those two effects are both real
uh but what we can see from this natural experiment uh is at the macroeconomic level low
wage growth hasn't triggered sorry low immigration hasn't triggered some explosion in wages
that's it so what what do you think are the major impacts then what are the things that are driving
wages so low at the moment oh there's no doubt that the main thing is these structural forces
we've changed industrial relations laws with effectively criminalized strikes in australia
uh we've made it very hard for unions to organize so kind of all the rules have been sort of changed
in a way that make it very hard for workers uh to to demand and get higher wages and of course you
know in the public sector which employs 20 up to 30 percent of the population in some states
the public sector governments have been keeping public sector wage growth low so you've got what
richard i hear that the treasure regularly says that you know he wants to see wages increase
he has the power to increase wages yeah just like every small business wishes
their customers had more cash but doesn't want to pay their workers more money the
josh freidenberg wishes other employers would lift wages for their workers and he doesn't want
to lift it for his this might be the biggest employer in the country exactly so the public
sector are very big employers and once upon a time public sector wage growth helped make it
easier to get wages up in other sectors because the private sector didn't want to see their best
staff getting poached by the public sector but not even just wages like uh in terms of conditions
like holidays and sick pay and particularly things like maternity leave in australia
the public sector often introduced them first and then the private sector kind of had to catch up
so there's lots of things that are keeping wage growth down including explicit state government
and federal government policies to suppress wages but back to the immigration part uh it is possible
we shouldn't ignore the fact that when because australia has a very targeted immigration program
we often bring people in specifically because they have specific skills and if you flood a lot of
people with particular skills and in a particular occupation you may well be able to use a small
number of new migrant workers to push down the wages in a particular industry or in a particular
occupation so at the micro economic level it's possible that the getting a lot of workers to
come in with particular skills bids down the wages but at a macro economic level you know we can see
we've got low immigration at the moment and low wages growth so you know we can't ignore that fact
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