The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, May 19, 2010

(In)flexibility in the private (public) sector labour market...

From CBA's economists today:

"Some of the noticeable side-effects from the Global Financial Crisis were that private sector employees agreed to reduced hours-worked and wage freezes, or cuts, to keep their jobs. Employers could, and did, adjust labour costs through 2008 and 2009 as they prepared for a full-blown recession. The outcome was an absence of widespread job shedding and a relatively low peak, of 5.8%, in the unemployment rate.

We are seeing the results of that weak bargaining power in the modest overall private sector wages growth trends. It also helps explain the softness in household spending because household income growth is weak. Aggregate hours worked are trending higher. But stronger growth is required in hours-worked and wages to lift household disposable incomes and then, retailing activity. We expect higher hours-worked and wages growth to gradually take hold in the second half of 2010.

The difference between the private (2.6%pa) and public sector (4.3%pa) wages growth is 1.7%. That is the largest difference since the series began in 1997. The wide gap also demonstrates the flexibility of Australia’s labour market and wage setting process."