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Australia as a low wage economy? « Previous | |Next »
August 2, 2005

Not so long ago Australia fancied itself as the smart and clever country that would be the stepping stone to Asian for foreign multinationals. They would set up their regional HQ in Australia and establish their manufacturing plants in Asia. Australia would become the high tech country. That was the ALP's modernizing dream.

No more. The Industrial Relations legislation of the Howard Government, which is due to pass through federal parliament this year, means a low wage Australian economy. The fall in incomes due to the lower wages of low income households will be compensated with increased government transfers in the form of tax relief and increased family benefits.

Why this pathway? Well Australia has been bypassed. The multinationals are setting up in China. As this article by George Zhibin Gu in Asia Times Online makes clear China's is beginning to make the shift from a low value-added, investment-driven economy to a high value-added, efficiency-driven one:

The latest trend is for foreign multinationals to set up research and development centers within China; IBM, Sony, Philips, Microsoft, Siemens, Intel and LG have set up more than 600 R&D centers in the country. These centers are not only responsible for producing products localized to cater to Chinese demand, but in many cases, next-generation products for the global markets. Countless businesses from the developing world have also rushed into China, developing the business chains even further....As long as China continues to be politically stable with fast-growing consumption as well as a friendly business environment, foreign investors and multinationals will continue to treat China as a priority.

So more and more deregulation of the labour market makes sense given the geo-economic reality of Australia becoming the quarry for China.It means a radical economic agenda that shifts Australia's economy to a low value added one.

| Posted by Gary Sauer-Thompson at 7:02 PM | | Comments (7)


Which means we are doomed to be the poor white trash of Asia, especially when all the true results of our thinly veiled feelings of racial and cultural superiority come home to roost.

I suppose our upcoming Asian overlords will be happy enough if we act like the same happy puppy to them as we have to our current masters.

Australia is already a low salary/wage country. Any professional who has worked in the US, Europe or Asia knows that. I can recall during Keating's tenure that there was a fear that Australia was the white collar slave shops of Asia. Our white collar professionals being much cheaper than their Singaporean, Japanese or Korean equivalent.

When I come back to Australia, I will be taking a massive pay cut, solely because Australian business doesnt pay as well as American business does. It is not like the cost of living is higher, Washington DC is just as unaffordable as Sydney is. There are many Australian professionals in the diaspora who probably cannot afford to come back to Australia.


is not the minimum wage in the US lower than that in Australia? Is not the welfare state in the US less generous?

Gary, The US spends tonnes on welfare. Health and Welfare at the federal level consumes $600 billion a year, more than the Australian GDP. That does not include the states, counties or cities spending on health and welfare either. The recent US Medicare legislation carries liabilities of 8 trillion - more than China's GDP.

There is a welfare state in the US, it just doesnt work very well, and is dominated by political bungling.

The Lowy Institute study on the Australian Diaspora found that the demographic of the diaspora was changing to what they called "gold collar" workers. These people arent going to come back if Australia cant compete with the rest of the world for salaries.

I know of several people that have gone back to Au from the US and taken a fifty percent pay cut in doing so. There is really no impetus to go back home if you can earn more overseas. Salaries are going to have to compete with the rest of the world if people are to remain in Australia, otherwise Australian youth will nick of overseas as part of the global labour pool, seeking adventure and greater remuneration.

A diaspora of 5% will quickly become 10% if salaries stay low. The only thing holding flight back will be nation-states trying to control immigration and where people can be. It is hard enough as it is to get a work visa because of nation-states.

The government has to cut back the size of the state. Mainly the federal government, it has been expanding its revenues each year, and handing it back as electoral bribes and middle class welfare. If Howard wants to make Australia competitive he can reduce taxation on middle income earners, so that salaries at least become competitive.

LITTLE, lying, deceitful johnie howard is making us into another America. Whether that is orders from G.Bush or perhaps johnie's crawling is debatable. Changes to the health, employment, drug policies and others. The Australian electorate, like the pre-war germans, are just too stupid to see this man as he is. numbat

The paper by george zhibin gu is interesting, which shows that the world and China are closely linked to each other. Therefore, finding rational solutions to settle differences is a must.

CNOOC, a Chinese oil company, attempted to buy a US company Unocal, a Californian energy producer, for $US 18.5 billion.

I say attempted because the bid aroused a political storm in the US that sank the bid.

So much for all the preaching by the US about free trade, the free flow of capital and the global marketplace.

Waht would Treasuer Costello, given the free trade agreement talks with China, do if CNOOC bid for Woodside?