There is increased talk about low wages growth, yet there appears to be little talk about just where wages come from, which is profits.

As an example, I guy I met lead a drivers strike at a large trucking company, saying they needed a pay rise.

I suggested that perhaps its not the companies fault, as they, (one who services the two major retailers), are constantly being screwed over in an effort for the big two to lower their cost bases and while I know he understood, he could not bring himself to accept the fact , being a unionist of cause.

You see, unless the company makes more profits, how on earth can they, short of dipping into their own pockets, pay the increase. Of cause that increase also brings with it additional costs such as super and work cover to name a couple.

People have to understand that as long as they seek out the bargains, and demand discounts, or shop online as an example, profits will be depleted and costs, including wages and other running costs, have to be cut.

I find it amazing how people expect a pay increase without realising, or accepting where the increase has to come from. To ignore this is to expect the employer to take a pay cut, just to give to the employee.

That is the way it works. Wage rises are needed to support the economy. Business are making all time high profits and wages are shrinking, so to balance that out wage rises are necessary. That has always been the case. We even have the govt; calling for wage rises.
The minimum wage needs to rise by 50 $ / week now.

Dear Butch,

Where do you get these ideas from?

Wages are an expense to a business just like materials, electricity and rates. I regularly change electricity providers because it is easy and there are plenty of of them. That being said the cost of electricity has gone up higher than inflation over the last few years. I always adjust my own prices to account for inflation, not to do so would be stupid.

Wages however have not kept pace with inflation.

It costs any business to turn over staff and it is something that should be avoided. One of the reasons I always thought it prudent to pay above award because it was an efficiency measure.

If a business can't afford to pay decent wages then in my book they should not be in business at all. The role of the owner is to assess if he or she has a viable operation based on all the costs vs the profit achieved. Some try to manage unsustainable businesses by screwing over workers. They might as well be hooking up illegal wires to electricity poles to bypass the meter. Both are theft.

As a Right wing individual favouring free enterprise in most things, and despising unions in general, I must point out that, as real wages fall, prices are INCREASING. As Australian manufacturers desert Australian workers and move off shore for cheaper wages, prices are still INCREASING. I think that Australian manufacturers and Australian retailers are among some of the greediest bastards on Earth.

When I was young, I worked in the family clothing retail business and, for many years there was price control on school wear and work wear. Profit allowed on both was about 30%; all other goods could be marked up to about 50%, which covered the business for the vagaries of fashion and left-over goods that had to be marked down to cost or less to get rid of.

Now, no controls at all, and fashion goods, particularly women's are marked up to 175% to 200%, and nobody blinks an eyelid.

Profits are now too high, and desk-bound managers salaries are too high. Workers' wages are hot the problem.

I have lost most of the sympathy I had for Australian businesses, and I am really pissed off with the politicians handing over of essential services to private, usually foreign, thieves

Wages do not come from profits. Profits come from wealth (goods and services) created by labour making use of the bounty of nature. Wages are part of the expense account of freeloaders acquiring wealth they have not personally created.

The low wages growth is the government's fault. They've failed to stimulate the economy, so now demand is too low to support higher wages growth.

Well in my view Adan is about the closest to the money, with most others just being the usual rant. Although I will say it's hard to stimulate an economy with a huge inherited debt, and a useless leader at the helm. Put the brakes on foriegn aid and immigration would be two good places to start towards bringing in some much needed cash.

Retail is one sector that are price takers, not price makers, so while the likes of accountants, lawyers, even trades can usually apply cpi to their pricing, retail can not as the consumer will just go elsewhere.

Farmers are another who take what they get which is one reason so many farms are now housing estates.

Like it or not, we are what we sow!

rehctub,
"Although I will say it's hard to stimulate an economy with a huge inherited debt"

Why? What do you think the worst case scenario(s) would be?

Firstly to clarify, wages do come from profits, they come from gross priofits because like all expenses, they are the difference between gros and net profits.

Aidan, my fear is if we borrow like drunken soldiers again, it will be wasted again, just like insulation or shhool halls.

In order to move forward we have to minimise the 'dead wood' that feeds from the public tit wherever possible. It is pointless bringing more people in when we dont have enough work for those who are already here, or if we cant get them off their arses, and why should we be borrowing for foriegn aid. Aid should come from surpluses, not borrowings because that is robbing from our own.

rehctub,

I agree the money should not be wasted.

But the "borrow like drunken soldiers" rhetoric shows you to be driven by anti government ideology and blind to the facts. Last time the government's behaviour was not like drunken anything: it borrowed and spent the appropriate amount to stimulate the economy.

In WA the School Halls scheme was excellent value for money, as the government scrutinised every contract and if anything was more expensive than expected, demanded to know why. It wasn't a disaster in SA, Queensland or Tasmania either. It was only in Victoria and NSW, where its management was contracted out to the private sector, that huge amounts of money were wasted.

IOW it's capable government that gives good value for money; minimal government just leads to false economies.

In order to move forward we must stop assuming productive people to be dead wood!

We should be running the economy to ensure there's always enough work for everyone, whether they're here already or not.

We do not specifically borrow for foreign aid. Foreign aid is funded through general revenue. Whether we are in deficit or surplus is immaterial to whether or not our aid spending is worthwhile. Indeed whether we're in deficit or surplus depends mainly on the economic cycle.

We can always afford a stimulus when we need one, regardless of how much debt we have.

I believe your opinion EmperorJulian is on point.

Wage growth has been constrained in the mining industry over the past three years due to a downturn in the sector, transitioning from high wages and pay rises during the boom.
Last month, Reserve Bank governor Philip Lowe warned that record high household debt and record low wage rises were limiting consumer spending and hurting the national economy.
Many economists predicted a small increase in wage growth last month and have since said the poor result would do little to increase the consumer spending many businesses rely on.
The Federal Opposition accusing the Government of failing to protect the income of thousands of low-paid weekend workers.
Why? Because the hundreds of thousands of retail and hospitality workers affected by this decision are also customers.
What do you think happens when you cut someone's pay packet by as much as 25 per cent for their Sunday shifts?
How much has this decision taken out of the economy. “The estimation is 5,750,000,000” That is what retail has lost in income. This intern will drive people to invest in cheaper goods, and forgo luxuries.
With costs rising due to fuel costs we are not going to have a consumer led recovery, we have stagnated.

So the greedy pigs who don't pay their employees adequately go out of business because of fall in demand for their products.