The Age reports that: “New employment figures show the labour market sank at the start of the election campaign, calling into question the government’s mantra of “jobs and growth” ahead of the release of the pre-election budget update expected on Friday.
Total hours worked have been sliding since January. Even among full-time employees, hours worked have been sliding since February.
Jobson Growth and Growthan Jobs
The weaker employment news follows wage figures released on Wednesday showing the weakest growth in decades. Wages grew by just 2.1 per cent in the year to March, the lowest result in the survey’s 19-year history.”
One of the reasons that Australia is facing the prospect of deflation is that wage growth, which drives demand, is no longer driving the economy.
Wages growth really fell off the edge of a cliff in 2013, the first year of the Abbott government. The dilemma for voters at the coming federal election is that neither party has a coherent plan to address the problem.
The Keynesian solution would be for the government to take up the slack in terms of investment but this would require increased government borrowing and increasing the deficit is politically toxic. Nonetheless, many well-informed economists believe that Australia’s debt is not significant problem and there is enough leeway to stimulate the economy.