Job insecurity is a bigger stress than the cost-of-living
“Most of our people have never had it so good”, is what British PM Harold MacMillan bluntly told his country in 1959.
Maybe Harold was right, Britain had emerged from the gloom of the war years into a booming economy. But if you told Australians that today you’d get blank looks, if not downright hostility.
Every survey, and most of the anecdotal evidence I hear, show that cost-of-living issues are the main worry for the average Australian household. But last week someone challenged this and effectively told the country to stop whinging.
The National Centre for Social and Economic Modelling (NATSEM) says it is increased spending on the “lifestyle” sector - including holidays and eating out - rather than essentials that is putting pressure on domestic budgets.
It found that cost-of-living pressures had eased since 1984, with the average household earning more and paying less for the basics.
NATSEM research fellow Ben Phillips, one of the authors of the study, says Australians have been experiencing “phenomenally good” economic times – and while there were some households struggling, most people were doing reasonably well.
Can it be true that the cost of living pressures that households feel have got easier since the 1980s? Are the people I speak to everyday, those who responded to the ACTU Workers Census last year and the Insecure Work Inquiry, kidding themselves about the cost of living?
I accept that we all look at the past with rose-coloured glasses, and forget that buying a home or paying the rent has always been a struggle for many people. Bills and other essentials have always taken a chunk out low incomes. Fuel costs for instance were higher (adjusted for inflation) in the early 1980s than today. We also tend to forget the advances in technology that have made TVs, audio equipment and even clothing and household items cheaper than in the past.
But I can’t believe the millions of Australians who have to think hard about whether they can really afford a meal in a cafe or a trip to the movies with the kids, have all got it so wrong.
I think that there are different pressures at work now than in the 1980s which make today’s situation even harder for households. First of all, we have a different pattern of life and work. In the 1980s the majority of women with children stayed out of the workforce until their children started school. Today a majority are back at work after a year.
This means that families are facing bigger childcare costs (in fact the NATSEM report found the amount spent on childcare had doubled since 2003, let alone 1984).
On balance, I think this is a good thing. Women should be encouraged to stay in the workforce, and keep up their skills. After all, as our population ages we will need all the skilled workers we can get.
However there are still many women who return to work sooner than they would like because of financial pressures. The most common of these pressures is the cost of housing, either paying off a mortgage or renting.
Housing is a massive cost, and getting into the housing market is becoming more difficult, especially for young people. The rate of home purchase among 25-to-44 year olds has declined 15 per cent in the last 20 years.
In the last 10 years house prices have increased by 147 per cent, while incomes have grown by 57 per cent. In 1991, the median house price was five times the average income. In 2011 it is seven times the average income. Capital city rents have risen at twice the rate of inflation for the last five years.
All of these trends are great for people who bought a home, or an investment property, ten years ago but have made it tougher for people who are trying to get into the housing market, or just pay rent.
We are also paying more for health and education, largely due to cuts to funding of the public systems and a growing expectation that we will pay more as individuals, on top of our taxes.
Post-school education has become more important than ever, and people are required to spend more of their income paying it. Students who graduated from university in the 1990s and 2000s are now having a HECS debt taken out of their income, something that didn’t happen in 1984.
Underlying this is one huge trend that few politicians even want to mention, let alone tackle. Work is far less secure than it was a generation ago.
Millions of people - 40 per cent of the workforce - are in casual jobs and contract or labour hire work. On top of low wages, and a lack of conditions like sick leave and holiday pay, there is a huge amount of uncertainty about when and how much people will work.
It is difficult to feel in control of life, or on top of expenses, when jobs are so insecure. It is very difficult to plan ahead and pay a 20-year mortgage on a string of 3-month contracts.
When a quarter of workers have no sick leave or carers leave and need to make their savings stretch to cover an unexpected illness, it’s hard for them to ever feel secure about paying rent and bills.
This growth in insecure work is linked to the other trend the NATSEM report acknowledges, the growing inequality of income. It is clear that the raw wealth of the community is increasing but its distribution is getting more uneven. The gap between households in the top 20 per cent and the bottom 20 per cent is growing. Poorer households, many on the aged and disability pensions are falling further behind.
Governments of all persuasions have tackled the rising cost of living by doling out a few extra dollars in the budget, rather than fight any of these underlying causes.
This might have worked during economic good times, but the impact of the global financial crisis means that we need to have a real debate about cost-of-living, insecure work and inequality.
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