Viewpoints: should the government intervene to fix low wages?


James Morley, University of Sydney and Beth Webster, Swinburne University of Technology

There have been a few suggestions lately on what policies the government should take up in order to fight slow wage growth.

Former Prime Minister Paul Keating suggested the superannuation guarantee – the amount employers must contribute to workers’ super – be increased to 12% to compensate workers for a lack of wages growth.

While the Australian Council of Trade Unions is calling on the government to lift the minimum wage and “recalibrate” the industrial system to ensure fair incomes for workers.

In this Viewpoints, James Morley argues government intervention could cause unforeseen problems, while Beth Webster notes the need for the government to re-balance the economy.


James Morley: Slow wage growth reflects two key aspects of the “secular stagnation” phenomenon sweeping the industrialised world: low productivity growth and low inflation expectations. Addressing slow wage growth should go to these causes, not to the symptom.

If the government was to intervene directly in the setting of wages to increase their growth, it would be reminiscent of the wage/price controls put in place in many countries in the 1970s. These were an attempt to stem high inflation by mandating exactly how wages and prices could be set. They were a mistake then and would be a mistake now, even if only for wages and not prices.




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The benefits of job automation are not likely to be shared equally


One problem is that such policies distort what is already the most complex of all economic markets – the labour market. “Insiders” (those with steady jobs) might win something on a one-off basis with higher wages. But “outsiders” (those without jobs or changing jobs) will surely lose, as firms ration labour given too many controls.

The labour market is notable for its complicated contracts designed to encourage high performance and effort. Because of these contracts, and issues such as confusion about adjusting wages for inflation (a surprisingly high proportion of wage changes are exactly zero, even though it makes no economic sense), wages already do not adjust enough as it is.

These distortions occur even though the labour market has high turnover rates, with flows between jobs vastly outnumbering flows between employment status. Introducing more controls would put sand in the wheels of the labour market by distorting relative wages across industries and decreasing employment.


Beth Webster: A well-functioning economy is all about balance. In Australia, we have a situation of profits being a high share of GDP, low wage growth, low investment spending and low interest rates. The problem is not inflation, but a lack of willingness by people with incomes to buy goods and services.

It’s not a problem of lack of funds for investment. Nor is it a problem of high labour costs.

Economists know that a reliable way to increase spending in the economy is to raise the incomes of the least wealthy. In our case, this could involve enforcing the payment of the minimum wage (for example, in the hospitably industry); raising benefits and pensions, such as unemployment and family benefits; and tax cuts at the low end.




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Is faster profit growth essential for a pick-up in wages growth?


There is ample evidence that a market economy will not invest enough to fully employ all people who want a job, if left to its own devices. The result is low productivity growth and a boom-bust economy. So government action is warranted, and that depends on the position of the economy.

Given the current economic settings, a rise in wages at the low end of the market could lead to higher investment and therefore employment (with the bonus of higher productivity growth). And it may well move towards income equality.


James Morley: I agree that government policy can be important to stimulate a weak economy. But its effectiveness depends on exactly how much slack there is in the economy. Currently, increased government spending or tax cuts are unlikely to be as stimulative, as they would be in a weaker economy.

To address low productivity growth, it’s better to go to the underlying determinants of labour productivity. The Productivity Commission investigates what these are and makes recommendations based on their findings. Notably, it explicitly recommends against a re-balancing between regulation and flexibility in the Australian labour market.

The commission is now examining access to higher education. It will be interesting to see the findings on this.

It’s worth noting that the shares of GDP to labour and capital have been quite stable in Australia at around 55% and 45%, respectively, over the past 40 years. This stability is exactly as predicted by the Solow-Swan model of economic growth. This model also suggests that lower productivity growth, rather than changes in income shares, has been more important for the recent slow wage growth.

Another cause of slow wage growth is low inflation expectations. Responsibility for addressing this lies with the Reserve Bank of Australia, which has been factoring low wage growth into its recent decisions to keep interest rates low.


Beth Webster: There is has been a trend of falling wages as a share of GDP in Australia. According to the ABS, in 2016-17, wages as a share of GDP was only 52.8%, which continues the long term decline from 57.1% in 1984-85. A difference of 5 percentage points is huge.

With 730,400 unemployed people and about an equal number who would like to work more hours, there is a strong case for saying we have a weak economy.

The ConversationThe market is not delivering the balance of demand and supply forces that we need to achieve full employment and raise GDP. Government intervention is needed.

James Morley, Professor of Macroeconomics, University of Sydney and Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology

This article was originally published on The Conversation. Read the original article.

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Egypt: Regional Intervention or Coup?


The links below are to articles reporting on developments both within and without Egypt, concerning the current crisis in that country and the persecution of Christians.

For more visit:
http://www.wnd.com/2013/08/saudis-credited-for-egyptian-coup/
http://www.wnd.com/2013/08/muslim-brotherhood-taking-anger-out-on-christians/
http://www.nytimes.com/2013/08/04/world/middleeast/official-urges-restraint-by-military-in-egypt.html

Mali: Islamists to Target France


The link below is to an article looking at the war in Mali and the French intervention.

For more visit:
http://www.guardian.co.uk/world/2013/jan/14/mali-conflict-france-gates-hell

India Briefs


Recent Incidents of Persecution

Karnataka, India, April 15 (CDN) — Police on April 10 arrested a pastor and other Christians of the New India Church in Mysore after some 25 Hindu extremists from the Sreeram Sena attacked their Sunday service, accusing them of forcible conversions, reported the Mathrubhumi daily. Pastor Vinod Chacko was leading the service when the Hindu nationalists barged into the church, stopped the prayer service and complained to police of alleged forcible conversions. The Global Council of Indian Christians reported that the extremists along with police detained the worshippers inside the church building, including 20 women and 10 children, taking down personal details about them and asking them whether they were paid money or otherwise lured to attend. Police also seized vehicles belonging to the church and those attending the service. Police charged Pastor Chacko, his wife Asha and others identified only as Sabu, Simon and Sayazu under section 295A of the Indian Penal Code with “deliberate and malicious acts intended to outrage religious feelings.”

New Delhi – A mob of about 150 Hindu extremists on April 9 attacked a Christian worship meeting in Bhajanpura, East Delhi, beating Christians with clubs and stones, including women and children. Pastor Solomon King told Compass that the Assembly of God church organized an open-air “Festival of Deliverance” meeting at which he was speaking; there were about 150 people in the arena when he arrived with 40 choir members. After the meeting began at about 6 p.m., some present suddenly shouted “Jai Shri Ram [Praise Lord Ram]” and started beating the Christians. Two Christians identified only as Prabhu and Abhisek sustained head injuries and received hospital treatment. Pastor King, his wife and other Christians also suffered bruises. The intolerant Hindus also destroyed furniture, a sound system, a generator and some Christians’ vehicle. The Christians had received permission from government officials to conduct the worship meeting, and five police officers were on duty to protect it; the Hindu extremists also severely beat them. The attack lasted for about an hour before police reinforcements arrived, and the extremists fled. Police were able to arrest two of the assailants.

Madhya Pradesh – An enraged mob of Hindu extremists on April 7 stormed into the prayer meeting of a Christian Assembly house church shouting anti-Christian slogans and filed a police complaint of forceful conversion against those present in Sagar. The Hindu extremists accused Pastor Joy Thomas Philip of forceful conversion, Pastor C.P. Mathew of Bhopal told Compass. Police arrived and took Pastor Philip and three other Christians into custody for questioning but claimed it was a protective measure. After area Christian leaders’ intervention, the Christians were released on bail on April 9.

Karnataka – Mulki Circle police officials on April 4 forcibly took church documents from Hebron Assembly Church in Mulki and told the pastor not to allow any Hindus to enter. The Global Council of Indian Christians reported that officials identified only as Inspector Shivaprakash and Sub-Inspector Neelakanta, along with five police officers, verbally abused Pastor I.D. Prasanna and harshly denigrated church activities. Police officials questioned Pastor Prasanna for three hours, telling him what church activities he can and cannot undertake, and threatening to close the church if he disobeyed. They also ordered the pastor to give detailed information about the families that attended the church service.

Karnataka – Police in Shimago on April 3 detained Pastor Abraham K.G. and a Christian identified only as Eerappa for their faith in Christ. The Global Council of Indian Christians (GCIC) reported that Hindu extremists led by area Bajrang Dal member Subbraya Shetty interrupted the worship meeting of the Jehovah Nizzi church and warned them to stop meeting. The extremists had been harassing the pastor since March 27, reported the GCIC. As the April 3 service started at about 10:30 a.m., a sub-inspector from the Hosanagara police station arrived in a Jeep with three other police officers to make the arrests. When the Christians asked about the reasons, the officials said without basis that the Christians were using abusive language. Later that evening, police released the Christians without charges after taking a statement from them pledging that they would conduct no future worship meetings – and that they should leave the area.

Report from Compass Direct News
http://www.compassdirect.org

Recent Incidents of Persecution


Madhya Pradesh, India, December 31 (CDN) — Hindu nationalists on Dec. 26 beat a Christian distributing gospel tracts in Damoh Naka at Jabalpur. The Global Council of Indian Christians (GCIC) reported that at about 3 p.m. Devanand Dandale was distributing literature when Hindu extremists from the Bajrang Dal and Dharam Sena grabbed him, seized his mobile phone and money and phoned other extremists to come. A GCIC coordinator told Compass that for nearly two hours the extremists repeatedly slapped and kicked Dandale, pulled his hair and mocked him, finally forcing him to the Kotwali police station. En route, they falsely told news reporters that Dandale was a convert who was forcing others to convert. On advice of police, Dandale filed a complaint against Amit Tiwari, Sunil Sonkar, Ambasingh Thakur, Surendra Jain and Babu Tiwari, after which he was sent home at 9 p.m. At press time Dandale was receiving medical treatment for swollen legs and severe pain.

 

Andhra Pradesh – On Dec. 20 in Hi- City, Hyderabad, about 100 Hindu extremists attacked Pastor T.R. Raju, warning him to vacate the area. The previous day Pastor Raju had led a Christmas celebration with a convert from Hinduism, an actor identified only as Surya, as a quest speaker, reported the All India Christian Council (AICC). Surya had mentioned the blessing of having Christ as God and did not criticize other faiths, according to the AICC. Afterward, however, four people came and argued with the pastor and verbally abused him. The next day, about 100 Hindu hardliners gathered at the pastor’s house, verbally abused him and beat him, according to the AICC. Surya also showed up and pleaded with the furious mob to stop, and police arrived as the attackers scattered. The extremists continued to threaten the pastor to leave the area or face harm. They also threatened the pastor’s landlord, who subsequently gave notice to the pastor to vacate the house in 10 days.

 

Maharashtra – Carol singers on Dec. 18 were beaten at 10:15 p.m. in Worli Koliwada, Mumbai, reported national daily the Times of India (TOI). Joseph Dias of the Catholic Secular Forum reportedly said 25 members of the New Life Church youth group were singing carols when Dhananjay Desai of the Hindu extremist Hindu Rashtra Sena began mocking them, saying they were paid to sing. Desai then phoned other Hindu extremists, who rushed to the spot in three cars and charged into the youth group, beating two of them, Ganesh Gadam and Joel Metrin. The TOI reported that the extremists forced the victims into their cars and took them to a police station. Dias told Compass that police issued a warning to the assailants, who threatened the Christians with harm if they persisted in holding public Christian activities.

 

Karnataka – Hindu extremists from the Rashtriya Sawaymsevak Sangh on Dec. 17 attacked a Christian and accused him of “large-scale conversion” in Shimoga. The All India Christian Council (AICC) reported that about 15 Hindu extremists gathered at the house of S. Prakash, manager of the Dalit Education Centre, and accused him of using the school as a cover for the alleged conversions. The extremists beat Prakash, leaving him with several internal injuries, and threatened further harm if he did not close down the school. They also cut down trees at the school and destroyed its signboard. Prakash filed a complaint with local police. Village officials are supportive of the work by the school, reported the AICC. A police investigation was ongoing at press time.

 

Madhya Pradesh – On Dec. 9 in Satna, police arrested Pastor V.A. Anthony and booked him under the state anti-conversion act. The arrests was made in connection with an incident that took place earlier this year when the pastor conducted a Christian funeral at the request of the parents of the diseased, reported the All India Christian Council (AICC). An activist with the Hindu nationalist Bharatiya Janata Party, Lakshimi Yadav, learned of the funeral and filed a case against Antony. Police investigated the case but found no wrongdoing by the pastor. In early September, Hindu extremists from the Sangh Parivar forced local newspapers to publish biased reports about the funeral and complained to the inspector general of police that the pastor had forcibly converted the parents of the deceased, identified only as Rajesh. The Hindu extremists threatened the pastor on Sept. 12.

 

Karnataka – Hindu nationalists from the Bajrang Dal on Dec. 8 disrupted a prayer meeting, falsely accused Christians of forcible conversion and seriously injured two of them in Gonilkoppa. The Global Council of Indian Christians (GCIC) reported that at about 8 p.m. the Shakina Full Gospel Church was worshiping when 10 extremists led by Hindus identified only as Manu, Devaraj and Manju stormed in. A GCIC coordinator told Compass that Christians identified only as Raju, Kaliamma, Rajukamma, Belli, Lovaliamma and Viji were verbally abused and dragged to the Gonilkoppa police station, where the extremists pressured police to arrest them. The Evangelical Fellowship of India reported that officers released the Christians without charges but strictly warned them, for security purposes, not to conduct future worship meetings at their homes. Belli and Viji, who bled profusely from the attack, received medical treatment at the Gonilkoppa Government Hospital. “Police, however, did not take action against the extremists for attacking the Christians,” a GCIC coordinator noted.

 

Madhya Pradesh – Armed men on Dec. 6 attacked the Rev. Thomas Chirattavalli in Satna. The suspected Hindu extremists hit the priest’s head when he opened the door of the parish house, then they chased and beat him. The parish driver, cook and another staff member heard the disturbance and tried to come out, but the assailants had locked the doors from outside. The priest sustained two deep wounds on the head, as well as injuries on other parts of his body. He filed a First Information Report at Burgama in Singrauli district.

 

Karnataka – Shimoga police on Dec. 5 forced the closure of a house church at Rippon Pete, Shimoga district. The Global Council of Indian Christians reported that on Dec. 3 Pastor Sebastian Babu was falsely accused of forced conversion by area Hindu extremists who threatened to harm him if he continued church services. On Dec. 5, as Sunday worship was going on in Rippon Pete, police arrived after the extremists complained of “conversion activities.” Officers took Pastor Babu into custody and warned him against conducting worship, adding that he had to report to the police station the next day with the landlord of this rented house. A GCIC coordinator told Compass that Pastor Babu and his landlord went to the police station on Dec. 6, where officers learned that the landlord had no objection to the house church. Nevertheless, they advised him against conducting Christian worship “as a security measure.”

 

Karnataka – Hindu extremists on Dec. 5 pressured the Slum Board administrative committee in Kengeri, Bangalore to demolish the Gypsy Prayer Church building. The Global Council of Indian Christians reported that the extremists barged into the prayer hall and disrupted a service led by a pastor identified only as Rajesh. They filed a complaint with the Slum Board committee against the Christians and persuaded it to order that the church building be demolished.

 

Karnataka – Police on Dec. 2 arrested a pastor on charges of attempted forcible conversion in Udayanagar, near Mahadevapura. The Global Council of Indian Christians (GCIC) reported that a pastor identified only as Johnson and a senior church member identified only as George were invited for a prayer service at the home of a Christian. Johnson, 26, of Kerala, was staying at the Evergreen School at Udayanagar near Mahadevapura. While they were praying at about 11 a.m., nearly 25 Hindu nationalists from the Bajrang Dal stormed the house, dragged Johnson outside and continued hitting and kicking him while falsely accusing him of forced conversion. A GCIC coordinator told Compass that the extremists forcibly took them to the Mahadevapura police station, where officers filed charges. At press time, the pastor was still in jail.

 

Kerala – Hindu extremists on Dec. 2 attacked a nun who is a college student in Ernakulam. The All India Christian Council reported that Sister Ann Matthews was attacked by a group of men inside Ernakulam South Railway Station and had to be treated for her injuries at Medical Trust Hospital. Matthews said she was targeted because she was a nun. Police have registered a complaint, but no arrests had been made at press time.

 

Karnataka – Police arrested a pastor on Dec. 2 after Hindu extremists beat him and accused him of forceful conversion in Udayanagar, near Bangalore. The Global Council of Indian Christians reported that Hindu extremists stopped the pastor, identified only as Johnson, as he was returning home after a prayer meeting. They accused him of forcefully converting Hindus to Christianity, beat him and dragged him to Mahadevapura police. The assault continued in front of police. Later Pastor Johnson was arrested under Section 295 of the Indian Penal Code for damaging a place of worship with intent to insult the religion of any class. A judge sent the pastor to Bangalore Central Jail, but he was released on bail the next day.

 

West Bengal – Radical Muslims in Natungram, Murshidabad have forbidden a woman who converted to Christianity from Islam to buy or sell if continues in her new faith, a source told Compass. The past few months the Muslims had ordered Chanda Babi and her family, who became Christians in February, not to attend church services and told them not associate with any neighbors. As Babi and her family continued to follow Christ, the Muslim radicals on Nov. 28 ordered villagers not to buy from her family’s milk business, and they ordered shopkeepers not to sell to her, the source said. They further warned that they would impose a large fine if her family continues to believe in Christ.

 

Uttarakhand – Police on Nov. 9 detained three Christians from the Indian Pentecostal Assemblies on false charges of forceful conversion in Ravli Mehdud, Haridwar. The Evangelical Fellowship of India reported that police officers stormed into the prayer meeting and took Pastor Manoj Kumar and two church members into custody. Officers verbally abused the Christians, uttered derogatory remarks against Jesus Christ and the Christian community and threatened to harm Pastor Kumar. The Christians were released without charges after the intervention of area Christian leaders.

Report from Compass Direct News