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
The people coming either have a job (skilled migrants) or are here on student or working holiday makers who are not able to work full time, who are not going to be employed by a business in a skilled role long term and who are not entitled to welfare. If you cant compete with a 20 year old indian student who can only work part time and will be leaving in a few years, then that might be on you.
You realise that many immigrants end up driving taxis or delivering food because their certifications aren't recognised here, right?
If you think that Indian student is going to "leave in a few years" you're mistaken dude, immigrants use education as a pathway to live here. Even if that was the case, it’s not solely me competing with them, it’s also new grads. Seriously what a silly statement.
I don't think you know how the world works.
No one comes to Australia as a permanent migrant without their qualifications being ‘recognised’ (it’s literally impossible to get a visa without recognition) but yes some people find it hard for Australian businesses to accept the qualifications or there is a need to get specific Australian certification. Engineers are notoriously the worst in this regard, but after two years about 80% all of them have engineering jobs https://www.engineersaustralia.org.au/sites/default/files/re…
And of course engineers are very low down in terms of our skilled migrants (about 2400 in total last year) the majority of which are in health care and IT. Healthcare has a virtually 0% unemployment and IT isn’t far behind.https://www.homeaffairs.gov.au/research-and-stats/files/report-migration-program-2021-22.pdf
So the number of skilled migrants who are driving taxis is very very small, and in terms of us having over 13m people in employment, the few thousand you are talking about is a rounding error that means nothing.
And, yes, students can seek to stay and become one of the approx 137,000 skilled permanent migrants (which includes other people applying from overseas). The vast majority of them need to already have a job to get a permanent visa (only 32,000 places for skilled people without a job, worldwide applicants) or work in a regional area and be nominated by a state government. Yes, some graduates stay. The very vast majority do not and cannot; once they graduate they have to leave (ok, they could apply for a visa - most do not - but once that is rejected they have to leave). Again the actual numbers of graduates staying are so small in comparison to the people who leave that I don’t really understand your point. Like most you don’t seem to understand the difference between temporary and permanent migrants and just conflate the two whenever it suits your agenda (or because you don’t know the difference)
Scratch below your superficial 2nd hand beliefs and look at reality, if you want to know how the world works.
but yes some people find it hard for Australian businesses to accept the qualifications or there is a need to get specific Australian certification.
Yes, some graduates stay.
Thanks for proving my point. I never made absolute claims saying that all skilled immigrants drive taxis or all students stay forever.
Unemployment is part of all economic policy, there is no full employment scenario.
When people argue against raising the minimum wage or raising Unemployment payments because those people 'should just get better jobs' they don't understand that there will always be people forced to be unemployed and forced to work for the minimum wage.
Definitely. More people at RBA needs to lose their job because that renovation that is costing twice as much as forecast is inflationary.
Mass, increasing immigration is the Elephant in the room that the government doesn't want to discuss - and the opposition are equally to blame. Immigration has been far too high for too long and both sides of politics are responsible.
There's simple policies that could easily be implemented to reduce it:
Slash overall immigration caps apart from the highly skilled category.
The end to all family reunion visas. This is a nonsense system. You need to be under 45 to get skilled PR, yet you can bring in your elderly parents. WTF!
Remove entirely the link between studying in Australia and getting PR, apart from maybe doctors. All students after finishing their studies must return home and can then apply for PR after gaining work experience. The international study sector is really not that much of an advantage for Australia.
Scrap investor visas - this just drives up property prices, usually in more desirable areas.
Make the wage requirements for temporary workers the same, or higher, than the local worker level. This would carve out a whole chunk of this immigration ponzi scheme nonsense.We grant 4500 parent visas each year and there are 125,000 applications to be processed - there is a 25 year waiting list already. Parent visas are not going to make a difference
Students who study and apply in Australia have to compete in the same scheme as people overseas; why do you think there is a benefit to make them leave and then apply? We want these people, they are university graduates (from our universities), highly educated who will contribute for the rest of their lives.
The investor visa is already planned to be abolished https://visaguide.world/news/australia/australia-to-abolish-…
The new temporary worker system (from 1 July) has a minimum salary level of $70,000 and the job must be on a skills shortage list and on top of that you pay about $10k as an employer as a training levy.
Basically the government has invaded your mind and already implemented almost every one of your thoughts…
Now if the RBA says more than 100,000 people need to lose their jobs in order to bring inflation under control.
Industries and agriculture are pushing for more overseas workers and government wants to increase immigration.
Place a 100,000 extra people on centerlink means more money out of the government how does this help?Based purely on those 100,000 having less income to spend this issue is a bit more complicated than that.
One thing I'm finding interesting is how much opposition there is among people to this mass increase in immigration. I've spoken to very few people who agree with it, yet government keeps plowing on. Albanese must be pretty confident that we'll just accept it and the opposition are not making it much of an issue. Strange.
Were we asked? No, not really.
there hasn’t been a change to the immigration levels. It’s basically the same as it has been for the last 10 years https://immi.homeaffairs.gov.au/what-we-do/migration-program…
https://www.homeaffairs.gov.au/research-and-stats/files/perm…
Well, all those fancy-pants scholars love to wag their fingers at us regular Joes, brandishing their economic diplomas like shields. But let's cut to the chase, shall we? Given the choice between loafing around jobless or coughing up a few extra bucks, it's pretty obvious what us folks would pick. Yes, thank you very much, we'll pay the extra and keep our jobs.
Only the federal and state governments have the power to introduce measures that selectively are able to reduce cost of living for the poor, whilst slowing runaway growth fuelled by the rich.
The RBA only has the blunt tool of monetary policy which is not targeted. They can slow everyone. Or they can boost everyone. They can’t selectively boost the poor whilst slowing the rich. They don’t have any power to allocate where their money goes, they can only pump it up or down.
How we got into this mess is 100% on the federal government.
How we get out of it is 100% on the federal government.The previous federal government chose to make the problem worse (tax breaks.)
The incumbent federal government promised not to touch those same tax breaks.The fact the media has managed to shift the blame to the RBA is amazing really.
Here's a Headine " People should stop paying attention to Sensationalist Stories about the RBA and make financial decisions which best suit their individual circumstances rather focus no things they have no control over like The Price of Milk or the RBA cash rate and leave collective behaviours and outcomes to those responsible for economic policy instruments"
Sorry in advance for the long and poorly constructed sentence
so start it from the top and RBA head should go first. lead by example
other factor might be a immigration. they almost double the number of migrants this year. this is not helping to control the inflationAge is currently correlating hard with spending, in that the older you are the more likely you are to be spending money. The main problem with the RBA at the moment is that every time they raise rates it actually gives more money (due to savings and super) to the people who are already spending heavily, the wealthier superannuants. NAIRU has always been a questionable, at best, economic theory and has been completely detached from reality for a long time. If NAIRU had any impact on reality wages would be shooting through the roof right now because workers would be in such extreme demand employers would be falling over themselves to get staff but that isn't happening. Some sectors have seen some gains but most are chugging along at below 3% annual increases. The problem is that Lowe believes in fiction.
I don't know that it's true that higher interest rates correlate with higher equity returns. If anything, evidence suggests a negative correlation between interest rate movements and equity market movements. It's true that older people are less exposed to higher rates and so can therefore continue to spend and drive inflation, but that's more due to life stage and having already paid down their primary residence mortgage than rates of return on savings accounts.
What are you going to do?
100K need to lose their jobs so Joe Blow can save some money on his mortgage. Lucky country indeed.
Shame they can’t target the wealthy. Always the poor that get knocked back down.
I’ve always thought they should at a federal level put an annual land tax on any property worth over $1.5m. $10k for every million a property is worth. Start taking some money back from those who can afford it. It will take some spending money out of the economy very quickly and not from the worst off.Perhaps you should suggest a progressive tax system that means higher income people pay more tax?
They already do. But even myself as a business owner pay myself a smaller wage to avoid tax. The business is taxed at a lower rate and because I own the business, once it’s taxed I can use that money any way I see fit via dividends and franking credits. Taxing income is the least successful way to get money out of the most wealthy Australians.
Taxing wealth vs taxing income. The very nature of income is that the wealthiest don't rely on it.
Paying yourself with fully franked dividends is no different than paying yourself beforehand the business profit is taxed?
Eg. $100 business profit. Taxed at 30%. You pay yourself a fully franked $70 dividend. This goes into your personal tax as $100 with $30 tax already paid.
Am I missing something here?
@filmer: All depends on which tax bracket you're in. It's why retirees love fully franked dividends. If you earn under $45k you're taxed at 19%. Come tax time you get a tax credit for the 30% tax paid on the fully franked dividends. So on top of receiving those dividends throughout the year, you get a tax credit for the difference between your income tax bracket and the 30% on the dividends. Reverse is true if you're in the 37% or higher tax bracket.
@sghetti: This is not really relevant to the situation. If the retiree received 42% higher dividends that were paid pre company tax they would end up in the same position. If in the tax-free, or 19% bracket you are simply being refunded because you paid too much tax.
Eg. Poster is retired. They pay themselves 7k franked dividends. Come tax time they enter 10k earnings with a 3k tax credit. They get a 3k refund, resulting in 10k total. Compared to simply paying themselves 10k unfranked dividends. They do their tax, $0 owiing and end up with 10k.
Yep! Let's put 100,000 people on Centrelink payments to bring down inflation. Super genius!
Insanity, isn't it?
By my rough calculation that's around $2.5 billion of payouts, and double that given the overheads of running centrelink, so $5 bn more government debt, which will inject more cash into circulation, which means more need to lose jobs….
Not sure if someone has mentioned it. Job losses in a downturn will generally come from organisations that are not able to produce value as efficiently.
A boutique store selling over priced goods will likely fail before a global conglomerate that can produce goods more efficiently and invest for operational cost savings. More supply from an efficient business can reduce inflation while maintaining profits.
So unemployment can be a by-product of the battle of the fittest (Organisations that produce the most value for least cost). Following the downturn, you will be left with efficiently run organisations that make a greater contribution to the counties economic growth.
Someone mentioned needing to hire poorly qualified staff when unemployment is low. In order to save operational costs, poor performing staff will generally be the first to be made redundant, leaving an organisation with a more efficient workforce. These people that are laid off need to be on centrelink payments so that they don't need to resort to crime to survive.
The RBAs job has to heartless in order to increase GDP, and they have to scare people into not paying for overpriced goods via interest rates and say silly things like, "work two jobs" so that the economy as a whole produces more value without that value being eroded by inflation.RBA board including the overpaid by a million dollars a year Lowe need to lose their jobs first
They're about 6 months behind where they should be and should never of spent the last decade with rates as low as they were.
Why does no one talk about the billionaires
or about the excessive salaries of the company executives ?That's because this is news from the "Business" section,
ie. it's the view of BUSINESSES and what's good for them.Where's the section in the news called "Workers" ?
Losing 1 billionaire job could save 100,000 jobs which provide value to the society.
How about soaring corporate profits? Nah, nothing to see here…
Knowledge is power;
when they control your knowledge,
they control your power.
RBA - Poverty is structural for our economy.
In another news, ASX 100 companies reported record profits…
So then why are we still trying to get offshore migration? 7,534 people were invited to apply for permanent residence last month!
Seems like left hand doesn't know what the right hand is doing
I think inflation is about price gouging.
Consumers (present company excluded :/ ) need to be way more active in finding good prices. In this way market forces will moderate the price gouging.
And government needs to be way more active and to prosecute price collusion by businesses.
Well when are those 100,000 people gonna lose their jobs then?
I thought the government is supposed to help us not kill us
So much for democracy
The RBA is not the government.
Happening already.
Redundancies happening left right and centre (even major banks like Westpac this week laid off a bunch of people)
Heaps of businesses small, medium and large going under as well
And here we are importing more bodies to fill in jobs due to “skills shortages”.
Everything is in a total mess. We’re going to have huge unemployment in the years to come.
If this is true why are JSP still so aggressive with Centrelink LOL
as long as my job safe I love NDIS personal feel like people have to much cash in pocket but that life at moment people are crazy mad
The RBA council that decide on interest rates are biased towards the high end of town. No one looking after lower and middle income earners who are feeling the affects of their decisions made during covid…
Folks don’t need to lose their jobs, folks need to stop buying/spending. Put the money into the bank, into your super, pay down your mortgage, pay off your existing car. Sit at home watching Netflix, walk to work, make your lunch at home etc etc. But no one tells the average punter this - instead the blunt interest rate slam (which also raises rents) is used to control the herd. Why educate when it’s easier to punish?
As others said, low employment means there's a lot of money circulating and people are inclined to spend, higher unemployment would reduce this.
Also, low productivity means high production costs, i.e. price hiking , inflation. Productivity is currently very low because many people feel secure with their job due to low unemployment ,and are adopting a relaxed approach to work, some refuse to go back to office and require WFH etc. A hike in unemployment would tame, or reverse this trend.
P.s. I'm no expert in macroeconomics so I may be wrong.
Wonder if they accept that jobs at the RBA have to go to .. oh wait
well people paying for property well above their asking prices, wages going up and there is shortage of resources so in order to reduce inflation you need to control people's buying capacity and number way you can do that but easiest is that you increase interest rates so people borrowing capacity reduce and then they spend less which means business cut jobs as no customer buying product at high prices … so indirectly you need people to lose job to get inflation down .. !
Agree. The biggest exponents of increased immigration are business and the higher education sector. They gain from lower wages and more income (profit) from international students yet don't have to deal with the downsides. That's left to governments, local councils, communities and the average punter.
Pure rent seeking.