By Joe Montero
The banks and other institutions are saying that the Reserve Bank will most likely put up the interest rate in November. The reason they give is that Australians are earning too much money, because unemployment is so low. This means that too much money is chasing too few goods and services and causing inflation. Their solution is a few more unemployed and keeping wages down, ad tools to dampen excessive their clam that there is excessive demand for goods and services.
Don’t you believe it. Behind the façade of doctored figures, is the reality where most individuals and households are finding that they can buy less with their income. Instead of there being plenty of good jobs out there, most of them continue to be insecure, part-time, and underpaid. The speculative bubble still continues to push up the cost of homes and rents.
The truth is that the cost-of-living crisis is still with us, fed by a combination of price structural weaknesses in the economy and price gouging by powerful monopolies. There is the added impact of Australia’s relatively poor performance in the global economy. The value of the Australian dollar is falling, and this is making imports more expensive. An important factor in this is the strength of the ties to the American economy.
Let’s tease out these issues.
A wrong definition of full time employment that suggests anyone working for an hour during the week of calculation is in full time work underestimate’s unemployment. Nor does it consider underemployment, or those not registered with Centrelink and doing something else because they can’t find a job.
According to the claim made by the Australian bureau of Statistics (ABS) in September this year, the unemployment rate fell slightly to 3.6 percent, while the participation rate, that this, those looking for work rose to 66.7 percent. The ABS also found that the number of hours worked for the month fell by 1,930 million, and said that fulltime employment fell, and part time employment rose, while with the same breath said underemployment dropped to 6.4 percent.
These figures contradict each other and suggest we are not being told the whole story.
We can still pluck something from what they have given us. Either unemployment and underemployment is faced by at least 66.7 percent of the workforce, and around 33 percent isn’t looking for a job. It doesn’t mean that these people don’t want full a job. The economy isn’t providing the opportunities they need. This is the problem.
There has been significant research into this, and the September figures continue trends that have been with us for a long time. According to the Ray morgan organisation, their research shows that he real rate of unemployment for August this year was 10.2 percent for September instead of the ABS’s 3.7 percent. This is accounted for by the fall in fulltime employment the rise in the number of those actively looking for work, and the rise of underemployment.
This Morgan definition still doesn’t count those who have been pushed off the jobseeker list without having a job, those relying on the income of others in their household, or those who have had to turn to study. Include these and the real unemployment rate was around 20.1 percent in August and s hovering around the same point today.
The graph below tells the story.
Take away the distortion of the Covid period, the longer run trend is still increasing unemployment and underemployment.
An inquiry into price gouging commissioned by the Australian Council of Trade Unions (ACTU), headed by former boss of the Australian Competition and Consumer Commission (ACCC). Professor Allan Fels is looking at the extent to which big business is using its monopoly power to artificially push up prices. This has come about because there is already considerable evidence that this is taking place.
“There’s evidence that profit mark-ups have gone up in Australia and globally, and there’s evidence that competition has been reduced here and globally,” said Fells.
Economic policy in the United States aims at exporting its debt with the rest of the world through its trade and financial arrangements with those countries economically tied to it. Australia is a case in point. The high cost of accessing finance from the United States controlled global banking system pushes up the exchange rate of the American Dollar and pushes down that of the Australian dollar. This means that imports become more expensive and the revenue for exports falls.
The Australian dollar is currently worth only 64 cents to the United Sates Dollar. When you consider that Australia trades with the rest of the world in the American currency, the nation is put at a considerable disadvantage in an increasingly unstable global economy.
Almost nothing is being done to address the lack of affordable housing. The costs of mortgages and rents continue to rise. These and other problems are driven by structural problems in the economy encouraging speculative activity at the expense of the real economy and distort the patterns of investment.
These are some of the reasons why interest rates are about to resume their upward trend and why the cost of living crisis is still with us.