Business faces a testing Christmas trading period after softer consumer spending dragged down economic growth to its slowest quarterly pace in two years.
Retailers and economists blamed subdued wages for consumption growth falling to a five-year low of 0.3 per cent and households pulling back on spending on vehicles, cafes and restaurants, alcohol, recreation and other discretionary items.
Economic growth slowed to 0.3 per cent in the September quarter, half the rate forecast by market economists. Weaker household spending was compounded by a sharp fall in resources investment at the tail-end of the construction of major mining and liquefied natural gas projects in Western Australia and Darwin.
ANZ senior economist Felicity Emmett said the softness in consumption was underlined by weak wages growth.
- Australian Financial Review, 6th Dec 2018
Rub my nose in the dirt and call me stinky but I really don't understand why business is surprised at this. Unless I am just really really stupid, I would have thought that it was obvious to everyone that if you pay people less money, then they have less money to spend. I could be wrong about this though. Maybe I've just been too plain ignorant to realise what's really been going on in this country.
Last year, the Business Council of Australia ponied up to the Senate Inquiry into Penalty Rates and basically beat the Liberal Party across the back of the head until they did what they wanted. Through the pages of The Australian and on telly like Sky News and appearances on QandA by various people over several month, the drum was repeatedly belted with the same club that the Business Council of Australia was bashing the Liberal Party with.
Their submissions basically said that penalty rates were something of an anachronism and that people who work on Sunday shouldn't necessarily be paid more than those people on Saturday. Furthermore, people who were working on Saturday had made life choices to do that and their time wasn't as vauable as it used to be. By cutting penalty rates, businesses would be free to hire more people and we should see a corresponding rise in employment.
The Business Council has supported the Fair Work Commission’s recent decision to adjust penalty rates under the Fast Food, Hospitality, Retail and Pharmacy Awards. We support this decision on the basis that it will provide opportunities for small businesses to open longer hours, provide additional shifts for workers and create new jobs....
Penalty rates should no longer be seen as a means to discourage employers operating at certain times. They should be seen as a fair level of compensation for the inconvenience of working hours that many would not prefer to work. In this context, it is important to note
that the Commission’s decision adjusts rather than abolishes penalty rates. In all cases except fast food, workers still earn a higher rate on Sunday than on Saturday – up to 175 per cent.
- Business Council of Australia, Submission to the Inquiry into Penalty Rates, Aug 2017
But how was anyone to know that if you allowed businesses to cut penalty rates that owners wouldn't just put the money in their pocket? How could anyone have foreseen that if business kept more of their profits and didn't pass it along to labour, that labour wouldn't have it to spend? Who would have guessed that without discretionary income, people wouldn't be able to spend it on discretionary items? If people's rents are going up, then how dare they spend more money on rent instead of vehicles, cafes and restaurants, alcohol and recreation?
Cuts to weekend penalty rates have hit Victorian women and regional workers hardest, threaten the state’s economic growth and have not created any more jobs, according to a Parliamentary report.
The State Parliament’s Penalty Rates and Fair Pay Select Committee was scathing of the effects of the cuts to Sunday penalty rates for retail and hospitality workers that began in July 2017, saying the reductions hurt the most vulnerable workers and had not achieved their stated goals.
- Australian Financial Review, 24th Jul 2018
I mean it's not like everyone who was going to be directly affected by this didn't spend months warning business that this would hurt them. Of course directly taking money from the from the pockets of people who work on Saturdays and Sundays, many of whom might already live week to week, would reduce their income, and therefore, spending. If your marginal propensity to consume was already 100% then it's not like you had the ability to save that money anyway.
I feel precisely zero empathy for business who suffer the effects in their profit and loss statements of reduced consumer spending, when it was business who clamoured for subduing wages in the first place. What we're witnessing is a fundamental and irreversible shift of the balance of economic power away from working people and their families and the people who have taken away that power from working people for themselves, are having a tantrum. Boo hoo.