Have just been watching this video on 9's YouTube channel where the RBA says more than 100,000 people need to lose their jobs in order to bring inflation under control, and my non-economic brain is struggling to comprehend why. I admit I don't know jack shite about economics, and would appreciate if those who're better versed in that field could shed light on why the two are connected. Working in a job where I see the number of unemployed people increasing by the day, and you come across news like this, you start questioning reality. Is it necessary for more people to lose their jobs in order to control inflation? Is there any scenario where almost anyone who wants/can do a job has one, and inflation is very low?
"More People Have to Lose Their Jobs to Control Inflation" RBA
AussieDaddy on 21/06/2023 - 20:24
Comments
@Malik Nasser: The government can tell RBA whatever it wants. But RBA is not obliged to take on that action, unless It is made dependent on Government advice by changes in legislations.
at the same time A PROPER REAL FUNCTIONING RBA can (and should) also comment and advice government on them forecasting recession, etc. and ask them to tailor government policies to not contribute to inflation (by e.g. cashsplashes). But ofcourse Government can put that advice in Bin.
@Malik Nasser: But the govt could take some of the responsibility off the shoulders of the RBA in controlling inflation, via fiscal policy.
Problem is, political parties get dogpiled as soon as they discuss tax reform - unless it's a reduction.
Someone on the news said it best, the govt has the precision tools to be able to help reduce inflation while not sending people into poverty, but instead leave it up to the RBA with their approach, which is like a sledgehammer without much of a target.
@AussieDaddy: The RBA is an independent body, it makes decisions about monetary policy independent of the government and does not take instruction from them. However, the RBA does meet with the government for consultation so perhaps there is some "guidance" / "influence" / or "say"? One of the objectives of the RBA is the economic prosperity and welfare of the people of Australia.
The Act lays down procedures which are to be followed if there is a difference of opinion between the Australian Government and the Reserve Bank Board as to whether the monetary and banking policy of the Bank is ‘directed to the greatest advantage of the people of Australia’. First, the Treasurer and the Board are to endeavour to reach agreement. If they are unable to do so, the Board is required to provide the Treasurer with a statement on the matter. The Treasurer may then submit a recommendation to the Governor-General who, with the advice of the Federal Executive Council, may determine the policy to be adopted by the Bank. The Treasurer would then inform the Reserve Bank Board of the policy so determined and the Board would be obliged to implement it. The Board would also be informed that the Government accepted responsibility for the adoption by the Bank of that policy. The Treasurer would lay before each House of Parliament a copy of the order determining the policy which was to be implemented by the Bank, together with the statement provided to the Treasurer by the Reserve Bank Board and a statement by the Government on the matter on which opinions had differed. To date this procedure has not been used.
Section 13 of Reserve Bank Act 1959 also directs that ‘the Governor and the Secretary to the Department of the Treasury shall establish a close liaison with each other and shall keep each other fully informed on all matters which jointly concern the Bank and the Department of the Treasury'.
@Transient: "…the monetary and banking policy of the Bank is ‘directed to the greatest advantage of the people of Australia’."
I wonder if the RBA governor, Philip Lowe, saying that interest rates won't go up until 2024, followed by what, 10 or 11 consecutive hikes, constitutes as "the greatest advantage of the people of Australia".
@AussieDaddy: Back in the 80s it certainly felt like the government was setting interest rates. Then I found this:
Former prime minister Paul Keating has warned the Reserve Bank of Australia (RBA) must not be allowed to become completely independent of government.
Key points:
Former PM Paul Keating says the Reserve Bank is not infallible
He says Australian government needs be able to overrule some RBA decisions if necessary
He says the override power has never been used, but it's still been effective
In exclusive correspondence with the ABC, Mr Keating said the recommendation to strip the federal government of its power to overrule an RBA decision, from last week's Reserve Bank review, goes against democratic norms.He said when he was treasurer in the late 1980s, he once had to threaten to use that overrule power himself to push the Reserve Bank to lift interest rates quickly to crimp an "inflationary burst of credit" from Australia's major banks, in the early days of financial deregulation.
He said Australia's government must retain the power to ultimately direct the country's economic policy, at the behest of the Australian community, and it needed a institutional mechanism at its disposal to overrule the RBA in exceptional circumstances.
Perhaps it has changed since then or there are several shades of grey when it comes to independence?
@Transient: A good question.
I find it funny back these day most people believed Keating introduced the high interest rates, when it was RBA.
The very beast Keating setup to protect Australia from an economic crisis.
History is repeating.
Thanks. However, also depends on whether you are referring to a "technical recession" or one of the other meanings. There are some articles where people think the US have already entered a recession based on indicators other than two qtrs of negative growth. I think when you see articles talking about mass retrenchments / falling job ads (ie, really hard to find a job), then you know you are in a recession (well that was what I noticed in the last one).
There are about 13m employed people in this country.
I'd dare say losing 100,000 is a drop in the ocean.
For inflation to fall, several things need to happen. Spending has to be reigned in at the private and public level.
13m employed people in Australia, really? That can't be possible, unless you're counting children and the retirees. :)
How many people do you think are in the country and employed?
How many people do you think are in the country?
Twice the number you mentioned, and about half of that fall into the "too young or too old" to work categories, no? I didn't search to find the real number, but that would be my guess.
@tsunamisurfer: LOL! Sorry, mate. I think I need glasses. All this time I thought you said "13m unemployed" and I also said in my reply "13m employed….?", instead of "13m unemployed….?" (which is what I incorrectly thought you said initially). My bad. Yeah, with that many people employed, over 100,000 losing their jobs isn't that many.
The ABS says that the Australian workforce is just over 14m
They should just let inflation rip. Would still be cheaper than my mortgage increases.
LMAO @ "c#nt"! That perfectly explains my conundrum. It all seems like a well executed pyramid scheme with very complicated economic jargon and theory. Well, I'm too poor and uneducated to worry about all that, I guess. :D
more money to buy expensive things or less money to buy cheaper things, what's the difference
Good skit on the corruption of our money, but they missed the punch line which is they're hammering the money printers.
More cash representing the same goods and services == inflation, so stop the money printering? But that's outside the scope of the RBAs mandate, conveniently. All they can do is apply a "single lever" which in the long run is a meaningless illusion either way it's pulled.
give me the keys to kirribilli and i would:
Turn down the immigration tap. Social benefits aside, it is clearly unsustainable to be bringing in this many people in a rental & housing crisis
50 bp cash rate increases each month thru to June 2024. get us to 10%. Enough pussyfooting with 25 bp every other month. the RBA needs to send a clear message it wants to stamp out inflation so get it over and done with. Bring rates back down AFTER inflation is curbed (not before, so that a higher level is maintained), to long term avg ~5%.
put price caps on energy / super profits taxes on energy companies. Sick of seeing these companies post record profits hwhile aussies freeze (Note I am somewhat 'insulated', in the metaphorical sense, as I am in WA. certainly my residence is not insulated at all)
Negative gearing reform - NG only available for new builds. But you wouldn't get this thru parliament unless currently NG'd properties were grandfathered in which i guess is OK
have a recession we have to have now and engineer a cooling of the economy every 10 years (either through stock market bubble, virus escaping from lab etc) such that the impact each time won't have to be as catastrophic as one after 30-odd years
not get re-elected but be remembered fondly by some
Residents of Kirribilli do not control the Reserve Board.
I personally would profit greatly with 8% ( depositors won't get 10%) on savings, but a 10% mortgage rate at these levels of debt would likely collapse the economy not just a recession.
Labor were happy to dump that responsibility onto RBA but the government could control interest rates if they wanted to.
https://greens.org.au/news/media-release/greens-fight-keep-g…
If you can skol a yard of ale in 11 seconds you can have my vote.
The World record is 5 seconds.
11 seconds is for pussies - and not worthy of a vote.
Future voters cry out, 2024 was a golden era of prosperity. The Gdsamp era. Why can't we have that again?
You’d have my vote mate!
Hey mate, I am voting for you in the next election. In fact I want to work as a volunteer in your election campaign
Why not pull some other levers instead of interest rates? We could increase the GST, or increase other taxes (like income tax) - and make them more targeted as well instead of just pounding mortgage holders every time.
Point two would be extremely dangerous. Interest rate changes have a significantly lagged effect due to the presence of fixed rate mortgages in the market. A change made today will take up to two years to flow through to changes in consumer behaviour. Moving to 10% like you suggest would probably see us go into a deep depression and potentially cause a banking / liquidity crisis due to the number of defaults it would trigger.
Point five is also questionable, there's no scientific reason apart from "rational expectations", sentiment, or animal spirits that a recessionary / depressionary period is needed, or even that the economy has a natural "cycle". There's good research that suggests recessionary periods are just stochastic shocks that happen randomly (i.e. outbreak of war, a virus, a bad policy decision, fraud, etc). If true, good policy response could mitigate, eliminate, or contain negative growth from the broader economy and help avoid or minmise periods of aggregate negative growth. Forcing a "cooling" wouldn't avoid the other shocks or the severity of their impact, it would just increase the number of negative growth periods in a given period.
The others look pretty reasonable to me.
Wtf? How does that work? Almost every business around me is screaming for people, they can’t get enough staff, or the staff they forget only last 6 to 12 months.
According to almost all the business owners I have yapped with over the last 12 months, it’s all because no one wants to work anymore, because the government gave them too much money over Covid…
So, we aren’t all employed, a majority of us are sitting at home and spending up all the stimulus money they gave us… apparently…
It's all confusing, mate, and nothing from the RBA or the government when it comes to inflation or interest rates makes sense to me. More pain to come, I'm afraid.
Business owners never really know what’s going on. Studies 1 2 are showing that long covid has pulled a substantial number of people out of the workforce.
Or, they’re not actually paying their staff properly and thinking that their poor treatment of staff is acceptable and that their staff are just lazy.
And many business owners refuse to accept the supply/demand equation of labour - they don't want to pay the extra wages that the current situation requires
It's the lying flat culture spreading through a generation. More young people are now highly educated, they aren't going to put up with working for minimum wage + unpaid overtime. Many small businesses abuse their workers.
Aren't they then going to have to charge more for their goods/services, contributing to the inflation problem?
@Soluble: Probably but that's the market at work. If a business wants to function properly in a tight labour market, then they have to pay the market rate for that labour.
Of course the opposite is true when the good times end.
It's because no one wants to work for minimum wage anymore. I think you'll find a lot of the businesses that can't find people are those looking for low cost workers (e.g. Retail, food, admin, etc). I was talking to a mate when we were buying here on the gc at the end of 2020. We've been hit quite hard by the interest rates but it's hard on everyone here who doesn't already own a place.
Rent for a unit here is $600/week in a lot of places and houses around 1 to 1.2k/week. My mortgage is 2k/week now.
No wonder businesses can't get people. Our nurse pays like 60% of her wage in rent, I honestly don't know how people on low cost jobs can survive.
it’s all because no one wants to work anymore, because the government gave them too much money over Covid…
Eh? That makes no sense.. this handouts were ages ago and could barely cover expenses for most workers. Most people that did qualify preferred going in to work instead and getting their full pay. The business owners you spoke with sound like the type of people no one wants to work for.
Also its because don't want to work in shitty minimum wage hospitality or retail jobs because of the spike in entitled abusive shithead customers they had to deal with during covid. Many of these customers behave the same even post covid and I know people in hospitality getting ready to leave for better jobs because of this. Not to mention the rise in cost of living that the pointless minimum-wage increases don't cover.
How is it possible that employment is inducing inflation if the rate of wage increases are lower than inflation?
All this shit is deliberately nonsensical so that theh poors never get the first clue.
If unemployment is too low, employers are essentially forced to pay more to attract any type of talent, and the people they end up employing are generally less qualified (lower skill level). As such you are paying more to get less (and if it is costing companies more, they will just pass it on to the consumer).
As an example, if a year ago an employee was earning $30/hr and could produce 30 widgets, that would equate to $1 per widget ($30/30).
Fast forward to now, and that previous employee has moved on to greener pastures, so now the company is offering a 5% wage increase to $31.50. Due to the low employment rate, the quality (and quantity) of new job applicants is much lower. As such a new employee is now much less efficient, say he can only produce 27 widgets per hour (-10%). Now the cost per widget is $1.17 ($31.50/27). This is a 17% increase in inflation with only a 5% increase in wages.
Clearly productivity has a large impact on inflation. This is why Philip Lowe was so concerned with falling productivity (which is linked to low unemployment - bottom of the barrel fishing for employers).Firstly the ASX200 is at the highest point it's ever been in history. Which suggest companies are making record profits driven by record widget making.
To make more widgets you need more people. Paying some bloke $30/hr who might have a hangover on Monday which induces -10% productivity is not going to induce inflation when for instance power companies have jacked up power bills by 25%.
So people are just going to have to use electricity -25%? How about we just breath -25%….it's not possible.
But wait did you say record level of wages?!?…..Now that we've established that wage rises are lower than inflation that means we are earning less in real terms and combined with an increasing interest rate people should be spending more of their savings into their mortgages which suggest less discretionary spending……but yet the market is still at an all time high and inflation is still increasing.
It's not possible because it's never made sense.
The real reason is unlimited stealth Quantitative Easing. Qantas is the perfect example, $600m free loan to fire a shit load of workers and converted all of them into cheap contractors = profit. Interest free loan to then leverage into the recovery economy = profit. Profit profit profit which pays investors dividends for discretionary spending/ equity pumping and pays fat bonuses to management = inflation.
Meanwhile they blame us poors hahaha
Essentially the mismatch between economic theory and what happens in practice.
$600m free loan to fire a shit load of workers and converted all of them into cheap contractors = profit.
Depending on the industry, but where I'm at contractors are definitely way better paid than full timers (which I think is relatively common)
How do we expect to lower inflation, when all that is needed is a drop off 100,000 people employed, yet the government is bringing in record migration, who arrive and obviously need to spend in order to live i.e buy furniture, a car, house or find a rental and then as soon as they settle find a job, so it all just seems like one very large ongoing cruel joke where the RBA is forced to do X to lower inflation while at the say time government does Y which completely contradicts what is needed to slow inflation down.
But on that note I do not know enough about economics to say if slowing down migration from now until say 2025 to slow inflation at a reasonable rate would work as I’m sure slowing migration may have other unintended consequences which is why the government can’t do this? 🤷♂️Most 'migrants' are students and working holiday visa holders - almost 70% of temporary migrants fall into these two categories.
If you cut immigration you are essentially cutting education services plus a fair whack of tourism. It will have a significant anti inflationary effect, not for the reasons you say (which are fairly minor eg notice what happened to housing and rent prices when we had no migration at all during COVID?) but because a huge number of people involved in the education field will be out of a job, tourism wont fall apart but will be significantly reduced and we will lose a lot of income from both those areas (plus lose the skilled workers who are filling gaps and helping our productivity). Which, of course, is a way to cut inflation - make 100,000 people unemployed and also reduced business income. This reduces tax take with reduces government expenditure, further reducing inflation (but also further reducing employment).
Done right it could work
We need to make the CPI index go down.
The CPI is based on products and services.
Bascially stop buying canned beans to cause the price to drop.
Bingo inflation defeated
Or just do what they do in the US. Change the CPI calc mix and change the definition of inflation. Look guys inflations going down! So let's now print 32 trillion and bail out the banks so they can leverage more toxic zombie assets as collateral for further equity pumps!
Lets just change CPI to be 100% based on newspaper prices. Let News Corp directly control RBA lever for the good of Australians! /s
But seriously, why are newspapers are a factor of the CPI?
RBA also said to work more hours to keep up with cost of living……..Which is it mate?
Keep in mind 1 out of 15 people are now working 2 jobs, and that's on the books.
100k people losing their jobs and going on jobseeker isn't, imo, going to make a huge dent in inflation.
"more than 100,000 people need to lose their jobs in order to bring inflation under control"
Uh-huh, so can someone rationalise that vis-a-vis the 1.5 MILLION immigrants they want to import?
Or are they saying that most of them will be unemployed so we will then be able to sing the praises of government for 'bringing down inflation'?
My best explanation for things atm is that I must have died in my sleep one night and have woken up in some weird alternate reality.
Who are "they"? Be mindful that the seemingly contradicting views come from different authorities with different priorities. Whereas RBA is more concerned with fighting inflation in the short run (as highlighted in your sentence), DoHA (or immigration) is more concerned with longevity of Australia's growth demographically and economically. Note that our birthrate to this day is still lower than what's needed to maintain a stable population.
Also, whilst there is indeed an inverse relationship between unemployment and inflation as viewed through the Phillips Curves, this correlation becomes much less prevalent in the long run. This is explained here:
https://www.rba.gov.au/education/resources/explainers/nairu.…'They' are the government. Did you miss their grand announcement a couple of weeks back? And yes, I don't trust anything any of them say but at least we know what some of them want to do to us.
As for al the economic theories, it's all well and good. Personally I just use the price of steak and petrol as a handy real world reference. :)
We might have different views but one thing I agree with is that no matter what, we as average consumers suffer most whilst the big guy's pocket gets deeper and deeper
@RobBoss: Agreed, lets unite on the big issues and agree to accept our differences on the little ones, that way we can all be mighty. :)
Who are "they"?
Be aware, you're talking to a conspiracy theorist. "They" shifts constantly, sometimes during the same sentence (e.g. they is both the RBA and the government, two different institutions with different goals, as you point out).
There will always be a They doing Things.
I will just leave it here: https://futurework.org.au/post/profit-price-spiral-excess-pr…
Economists keep focusing on wage growth (which is not really a thing in this climate) and jobs growth as drivers of inflation and completely ignore the impact of profit growth. Now, studies are showing that profit growth has a material impact too.
Corporate greed is absolutely making things a lot worse than they should be. Colesworth increasing profits by around 15% in the current climate a perfect example.
Yes the wage price spiral happened in the 70s. There is no evidence it is happening now, apparently it is beginning in the USA (because people literally cannot live on their minimum wage) and it's a convenient excuse to sell to the public
I'm sure firing up the money printer, and making $280 billion dollars out of thin air had nothing to do with it.
Same amount of economic output, but more money. It's almost like that makes the money worth less.
Who'd have thought?
Though if memory serves I think I also warned about this back in 2020 when they gave themselves QE powers. Nobody listens, nobody cares…until it's too late. :)
Conspiracy theorist! 😂
It's almost like people don't understand that just making more money with zero value attached to it, dilutes the value of the money that's already in distribution.
pfftf, I was going for 'conspiracy realist', close but no cigar I guess?
Not that I can afford cigars mind you, how can I own nothing AND still be happy? :P
(It's almost like people don't understand that just making more money with zero value attached to it, dilutes the value of the money that's already in distribution.)
Wut like do you mean that the more there is of something the less worth that something has?
Nahh, I need to hear it from a university trained economist before I'll believe that!
@EightImmortals: Well, you wont hear it from a university trained economist because you are only talking about 1/4 of the equation.
If there is one widget and it costs $20 and there is $20 available to buy it, the price will be $20
If there is $40 available to buy it, then the price might be $40
This is as far as you have gone
however, if I have capacity to make 3 widgets (but havent because people only had enough money to buy one), and there is now $40 available to buy, I might make 2 or even 3 widgets. The price wont increase and might actually do down even though there is more money in the economy
This is even in the monetarist equation MV = PQ. You are talking about M. You havent even touched on V, P or Q.
so its almost like people believing in something because they just ignore everything that doesnt support their version of events…
@dtc: So if I didn't have $40 but went to the bank and borrowed the $40 where does the money come from?
And if they charge me interest on that $40 where does that money come from? :)
This is basically it, but it's interesting how it happened. Covid saw massive reductions in the amount of credit card debt people hold, increases in savings and topping up offset accounts. The Australian people were incredibly sensible in getting extra money and not creating inflation via just keeping their spending at normal levels.
Then supply shocks happened but instead of people reducing spending, we paid more to get what we want and inflation started creeping up. But that supply shock is ending and prices are still going up because every business is seeing this as an opportunity to price gouge to drag that money back out of people. And that's what is happening, credit card balances are rising, people are depleting their savings, all because there's not really any competition in our country. All the power producers are ramping up profits because there's no real competition on power supply, the power retailers are all just jacking things up at the same time in a near collusion manner and we the people wear it. Banks just follow the RBA. Supermarkets have realised they can double the price of some items and people will keep buying it.
Not only do we need to make a bunch of people destitute, we need to drag those savings out of the masses so companies actually have to compete on price again. It's a crying shame, because for once we were all mostly better off.
Economics 101:
Rich people pay 'experts' to convince govts and plebs of bullshit to make the rich richer.
Anyone remember Trickle Down?So if 100,000 people lost their jobs, what would that do to wage growth???
The RBA has it all wrong. The biggest issue is unit profits caused by market dominance and market power in goods and services that matter to inflation.
The OECD gets it: https://www.oecd-ilibrary.org/sites/ce188438-en/1/3/1/index.html?itemId=/content/publication/ce188438-en&csp=f8e326092da6dbbbef8fbfa1b8ad3d52&itemIGO=oecd&itemContentType=book#section-d1e199-6539cc9538 (see box 1.2)
The RBA is only just realising that companies, SHOCK GASP HORROR, can set prices however they like and aren't charging extra because of wage growth… i really dont think they have the right levers to pull at the moment.
If you want a laugh, have a look for the RBA's prediction of wage growth over the last 15-20 years - they honestly have no idea
Fine ! But can we make sure that at least 100 of those 100,000 jobs lost would be the useless fat cats in RBA?
The RBA is a one trick pony. But they are also showing the true colors of the governing elites. If you still think the government want's the best for your or for the country, I'm smh.
RBA need to stop picking on the workers and families, this is completely driven by corporate greed and profits.
There are even articles by economists (like the oecd) which confirms this
It depends where the wages money is coming from. If its just the typical shuffle then working can actually be bad for the economy. What I mean is: Someone works for the government and leaves their kids at childcare. Govt gives free money to the childcare centre to look after the kids. Worker takes home pay. Government department could get the same amount of work done with less people, but because of diversity targets or some other bs they employ too many people. More money is being spent on less work, and even more money is getting spent on subsidised childcare. Take this person out of the workforce, and boom. Same amount of work gets done, no childcare subside is paid, and wages are also saved. So "the economy" is maybe $150k per year better off for each of these people who don't work. Unpopular view, and I bet some economist could do some gymnastics to justify a different view point. But pissing money away in this manner is not sustainable, and maybe we are seeing that now???
There aren't any government departments with too many employees, quite the opposite, they rely on contractors to do critical work because they aren't allowed to hire enough employees (and they pay those contractors more than an equivalent employee). You are referring to a stereotype that died 20 years ago.
Its a broken system where people need to loose jobs, but the government keeps increasing migrant intake to fill job gaps tp control inflation
I just wish the busses in sydney had enough employees so they stop cancelling services
Who are these "jobs" we can just delete?
They don't want to delete them, just rehire immigrants who will work for half the wage.
Damnit they took'er jobs
Lazy.
I've seen plenty of immigrants in corporate doing jobs that an Australian could do, e.g. administration, executive assistants, project management etc. Do you honestly believe that no Australian has been elbowed out of a job by an immigrant?
If more people need to lose their jobs then why is the governement increasing immigration? Wouldnt stopping immigration reduce inflation and fix the housing crisis at the same time?
Sure RBA… you first!
I don’t understand why the RBA are bothering continually increasing interest rates when this pathetic government has plans to bring in hundreds of thousands of people up to 2024, right when housing is in short supply and ridiculously priced, rents increasing in double digits and queues just to apply? I am a simple working class Australian and I despair at what the next few years will look like. There is not one area that has not been affected by price increases in essentials - housing , food and fuel the most important and basic of needs, but Labour is more concerned with’the voice’ or LGBTQetc rights. I despair for my children and grandchildren, even if they work extra jobs or hours, they will never catch up. I thought covid was bad, but this is a f@ck up of the highest order and once they are done screwing us all over and people revert to lib/Nat governments, they are left cleaning up their mess and have to make difficult decisions in order to get us back on track. We are no longer the’lucky’ country 🤬
Use gst instead of interest rates, far fairer. Measure inflation net of a variable gst.
Increase the gst on non essential luxury spending and lower it on essentials which are not exempt
Private school education shouldnt be exempt from gst, its luxury education for the "haves"
I agree but policy makers are much less likely to get voted in again if you bring in a new tax
Albanese running a big Australia policy adding 715,000 to the population over the next to years is likely to increase unemployment, doubt that will reduce inflation though.
Yeah the damage was already done during Covid under the coalition.
No matter how you spun it $750 billion floating around an economy is never going to go away without some sort of inflation.
It's not inflation it's greedflation but none of the politicians want to hit their own share poket. If they all just dropped prices by a couple % all done. No jobs lost.
This would work and China kind of does it, but a government dictating prices in a previously free market would destroy business confidence. Unless you're expecting businesses to reduce profits out of kindness.
How many people does the RBA employ? Seems like a good starting spot.
So.
Not only have they been fudging the definition of unemployed and underemployed people but they're also adamant that unemployment in the 3% range is perfect.Funny thing is it's a demonstration of how overcooked the market is. There's still too much money floating around propping up zombie jobs (jobs that really shouldn't exist). I still remember reading the tech jobs in America paying $180-$200k a year to a 22 year old HR graduate, 1000's were made redundant only to realise their worth is nowhere near this.
propping up zombie jobs (jobs that really shouldn't exist)
There’s probably heaps of these types of roles around. I would argue newer roles we’ve seen lately such as UI/UX design is a joke job. You don’t need a person to design a button on a website. This kind of role has come out of cheap money and companies are running way too fat if they have people doing the kind of thing.
I still remember reading the tech jobs in America paying $180-$200k a year to a 22 year old HR graduate, 1000's were made redundant only to realise their worth is nowhere near this.
Very true. Not long ago $100k was seen as a very big salary, these days it’s pretty average. Cheap money has completely warped our sense of reality. The sad thing is that with how expensive houses are people need high salaries to buy them. It’s all a huge mess IMO.
The sad thing out of all this is that normal people will lose their jobs out of no fault of their own. It’s because our interest rates have been going downhill for years on end as an attempt to boost spending and our economy. Now that rates are up just to 4.1% we’re already seeing redundancies across the country. AND we have more people coming. If these people can’t find jobs (and the market is already becoming very competitive) we’re essentially importing unemployed people to spend their money and once they’re broke they’ll become homeless or something. Or we’re importing wage-decreasers.
What innovation has come out of keeping rates on the decline in the past 10 years? There are some good companies out there but the main ones that stick out are AfterPay, MilkRun, Deliveroo etc and IMO those companies aren’t that sophisticated. The main thing lower rates has done is just pump up property prices.
Immigration is the no.1 priority of the big corporates as it is the most effective wage suppression tool.
Keeping working people's wages low is 'good for the economy'. (Increasing wages is also good for the economy, but that requires corporations to actually increase the value of their products as well).
Anyone who believes otherwise is asleep.
@AussieDaddy: The RBA operates independently to the government. The government cannot tell the RBA how to do its job.