How to really fix wage stagnation

Many Australians see wages for the low-skilled as far too low already and believe wage stagnation is making things worse.  They find it inconceivable that the low-paid can survive on current wages, and so support government intervention to raise wages.

In this climate, the ACTU’s “Change the Rules” campaign to lift the wages of the low-paid does not come as a surprise. Nor perhaps does the business lobby’s widely reported response praising enterprise bargaining and condemning the ACTU’s plan to restore “1970s-style” industry bargaining.

The positions taken by peak union and employer bodies, while unsurprising, are disappointing.  Both sides seem content to offer the same old tired rhetoric, and neither seems remotely interested in genuinely exploring fresh ideas.  But what if the standard policy prescriptions are unlikely to reverse wage stagnation and there are practical alternative policies that could?

Any serious consideration of this issue needs first to examine the … Read the rest