Wages: Why Young Aussie Workers Aren’t Too Demanding

Ridley Corporation Wheat Farm
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A company owned by mining tycoon Gina Rinehart has claimed that Australia has a problem with ‘workforce culture’. Sue Daubney, of Bannister Downs Dairy, says younger Aussies are neglecting jobs in agriculture.

Here’s what she said on the issue:

The new workforce culture is the big problem. They expect to be paid high dollars and expect certain conditions. Agriculture can’t afford that’.

Basically, Ms Daubney thinks younger workers are shunning unskilled labour. But that’s not the biggest issue.

She believes Australia’s young are asking for too much money. I don’t know about you, but that strikes me as unnecessarily biased.

It’s one thing to suggest that young Aussies don’t want to work in agriculture. After all, not everyone is suited to that kind of labour. That’s especially true of young families accustomed to a certain way of life. It’s another thing altogether to accuse them of overreaching in their demands. Tarnishing young Aussies as demanding, when it comes to wage expectations, is unfair. After all, the entire nation is acclimating to stagnant wages. At 2.27%, salaries are growing at their slowest level in over two decades.

I’d say we’re all learning about slacker wages the hard way. Young and old aren’t seeing salaries rise in any meaningful way as is.

Granted, Ms Daubney is referring to Western Australia’s workforce here. During the good times, the mining boom raised wages, and expectations, for unskilled workers.

Well, of course it did. That’s what happens in a boom. Company profits rise, wages edge higher, asset prices grow, and the cost of living goes up.

In Ms Daubney’s world, this was a bad thing for Aussie workers. But is it wrong to assume people expect higher salaries in a booming economy?

If you’d spent a decade of your working life in the mines, you got paid for your toils. And your spending habits matched your pay check. You bought houses whose prices rose in line with the boom itself. You were led to believe the good times would last. But just like that…they didn’t.

Now you’re not just part of the problem, you’re the problem itself. Is that fair? I don’t believe so.

Agriculture industry should take some of its own advice

Ms Daubney wants young Aussies to readjust their expectations of working life.

By this, she wants unskilled workers to drop demands for $30 an hour wages. She’d like those expectations to fall closer to $20–25 an hour. Why? Because that’s the going rate for the agriculture industry. She says, ‘We have a low margin. The return on investment at those hourly rates doesn’t work.

But maybe the industry should revise its returns on investment instead. We know for certain that the business sector across Australia is holding back on investing. We know this because the Reserve Bank more or less said as much. Businesses aren’t keen on spending because it doesn’t fall in line with their own lofty expectations.

You see what I’m getting at with this. It’s one rule for us, another for them. It’s fine for businesses to demand high returns on investment. But when workers do, they’re being greedy and unreasonable.

Because of this, the agriculture sector is looking elsewhere for workers. It’s hiring foreign labour on visas to do the work instead. Ms Daubney explains:

We have normally two temporary backpackers at any one time and they’ll do whatever has to be done where as it is sometimes hard to get local or permanent Australians to do those jobs, not always but it is an issue.

It’s the new workforce culture that is the big problem. They expect to be paid high dollars and expect certain conditions. Agriculture can’t afford that.

Sometimes in agriculture, I can tell you that’s not very attractive and that’s why we often end up with 457 visas or temporary residents because they understand the value of having a job and nothing is too much trouble as long as they get paid for it’.

In other words, Aussie workers are pampered. Or that’s the line we’re supposed to believe.

This is coming from the same woman who’s boss is Gina Rinehart. That’s the same Gina Rinehart who not long ago suggested African workers would work for less than $2 a day.

Presumably, Ms Rinehart wanted people who accepted a daily pittance to help keep production costs downs. Her reason for this? Ms Rinehart was worried about the country’s future at the time. She had right to worry. But she was more concerned about profit margins, rather than the livelihood of the average Aussie worker.

In an economy with 6.1% unemployment, I suspect most Aussies understand the value of having a job. Suggesting anything else is insulting to those that can’t find work.

In any case, as absurd as these comments are, everything is relative. Australian workers need higher wages because the cost of living is high. With wages not growing, it’s not as if people are demanding pay rises. All they’re asking for are wages that don’t worsen their standard of living. If agriculture can’t provide that, then Australia’s young will look elsewhere.

A way to save West Australian agriculture

Despite the unfair accusations levelled against young workers, Ms Daubney makes one good point.

Agriculture is one way to ween Western Australia’s economy away from the mining sector. Doing so would allow other sectors to take up more slack. And agriculture is a good a bet as any.

With rising food demand across Asia, WA could have a big part in supplying developing nations with foodstuff. But the industry needs help. It requires funding because agriculture currently generates low growth and profit margins. It demands the kind of capital the industry isn’t getting.

One suggested solution calls for a reversal of government sector super funds from eastern states back to WA. What’s more, asset managers, investing offshore, could benefit WA’s agriculture industry in the right circumstances.

That’d be a positive step in the right direction. The industry might be able to provide the kind of wages to lure young workers.

I want to finish by addressing the issue of ‘workforce culture’ again.

Australia doesn’t have a problem with workforce culture. It has a problem with job creation. It has that problem because industries aren’t investing.

But can we realistically expect the jobs market of yesteryear to reappear? The kind of culture that Aussies were once accustomed to? The one that had a job ready for anyone who was willing to find one? Unfortunately, no. That world has left us. And there’s no getting away from the realities facing the economy.

The mining boom, once a beacon of prosperity, is now on its deathbed. Commodities markets move in cycles, but we’re at the end of the latest one. There’s no telling how long it’ll be before the cycle starts anew. The next great mining cycle might help your children, but it won’t help you now. And it won’t help young Aussie workers who want an extra $5 an hour. Nor will it help a stricken agriculture industry in the west that refuses to pay them that.

Of course, all of this is just a symptom of the modern Aussie economy. It’s yet another sign that the economy is inching towards a recession.

The Daily Reckoning’s Greg Canavan says Australia is on course for its first recession in 23 years.

In a free report, ‘Australian Recession 2015: Unavoidable’, Greg reveals why our economy finds itself in the hole it’s in. He’ll show how debt levels have spiralled out of control. And he’ll prove why that means a recession is almost inevitable.

But there are actions you can take right now to lessen the blows of the recession.

Download your free copy today to learn how to protect your wealth from the fallout of the crash. To find out how to download his free report right now, click here.

Mat Spasic,

Contributor, The Daily Reckoning

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