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."

Thursday, May 19, 2011

The calm before the wage-price spiral storm...

So, Q1 wages were relatively benign. Actually, including bonuses, overall wages growth was very healthy. UBS comments, "including bonuses, total wages growth ticked up to 4.0% y/y – the highest since Q408 – from 3.9% y/y, and just 3.2% in Q210 (with non-seasonally adjusted up 0.9% q/q, after 0.8%). Private lifted to 4.1% from 3.8%, but public moderated to 3.7% from 3.9%." My rates strategist friend reckons that labour market stakeholders, such as unions, will be pushing aggressive wage claims before the next election, which current polling suggests the Government will lose. Unions therefore have an incentive to get some wins in for their members before the six-year Coalition thaw. Here's a report on an AFR article that seems to validate this view:

"Unions representing workers in the resources, manufacturing, retail and services sectors are renewing efforts to negotiate five per cent wage increases, in a move that employers say will pressure inflation and interest rates, according to a report by the Australian Financial Review. Unions claim the rising cost of living is necessitating the pay hikes, which would be above last year's 3.5 to four per cent pay increases seen in many sectors last year. The push for five per cent pay increases will come in negotiations with OneSteel Ltd, Qantas Airways Ltd, Downer EDI Ltd and Wefarmers Ltd-owned Coles, among others, and Australian Metal Workers Union confirmed it is advising delegates to push for five per cent pay increases, the report said. In more vulnerable sectors, unions are also seeking additional job security guarantees and commitments to training, according to the AFR."