The problem for manufacturers in Australia:
Some manufacturers and political groups, propose that pay and benefits for industrial awards in Australia be reduced in order to reduce manufacturers costs. Some of the benefits that I have heard them argue:
Some of the economic costs that I can identify:
Not sure if the would be a net increase or decrease of revenue from personal income tax, or from company/personal tax combined.
If a government seeks to sustain or grow the size of it's local manufacturing sector, while at the same time maintaining the quality of life of it's working class and middle class, AND sustain or improve the country's GDP and other economic indicators, then what kind of sustainable policies can it implement to achieve this?
Does the existence of cheaper overseas labour mean that government must reduce wages and benefits on existing industrial awards in order for local manufacturers to sell their product at a profit?
If I recall correctly, Germany addressed this problem by subsidising wages in manufacturing with public money, effectively reducing the manufacturer's wage bill and putting them on a more level playing field with overseas competitors. Is such a solution transferrable/expandable to other indutries and economies, and is it sustainable?
- Australia's industrial awards require manufacturers to pay their Australian employees high wages compared to the Third World, and even some other First World countries such as the USA
- Manufacturers in Australia have to sell their product at a higher price than their overseas competitors in order to cover their comparatively higher wage bill.
- Some manufacturers only remain in business due to goodwill and better customer service
- Many manufacturers have closed down as they are unable to sell their product at a profitable price.
Some manufacturers and political groups, propose that pay and benefits for industrial awards in Australia be reduced in order to reduce manufacturers costs. Some of the benefits that I have heard them argue:
- Manufacturers would be able to stay in business, and potentially expand/or open new businesses.
- Manufacturers would be able to employ more people.
- Increased company tax revenue per business.
Some of the economic costs that I can identify:
- Lowering wages for employees means that those same employees have less money to spend as consumers.
- Lowering wages for employees lowers the socioeconomic status of a large number of people, which lowers the educational outcomes for their children, which in turn leads to future skilled worker shortages, higher crimes rates etc.
- Reduced income tax revenue per employed person.
Not sure if the would be a net increase or decrease of revenue from personal income tax, or from company/personal tax combined.
If a government seeks to sustain or grow the size of it's local manufacturing sector, while at the same time maintaining the quality of life of it's working class and middle class, AND sustain or improve the country's GDP and other economic indicators, then what kind of sustainable policies can it implement to achieve this?
Does the existence of cheaper overseas labour mean that government must reduce wages and benefits on existing industrial awards in order for local manufacturers to sell their product at a profit?
If I recall correctly, Germany addressed this problem by subsidising wages in manufacturing with public money, effectively reducing the manufacturer's wage bill and putting them on a more level playing field with overseas competitors. Is such a solution transferrable/expandable to other indutries and economies, and is it sustainable?