Corporations’ profits soaring as inflation skyrockets and real wages fall, report reveals – Michmutters

Corporations’ profits soaring as inflation skyrockets and real wages fall, report reveals

There are fresh calls for big business to rein in their big or “supernormal” profits in order to provide low wage earners some desperately needed household budget relief.

The Australian Council of Trade Unions (ACTU) wants businesses to share a large portion of their profits with their workforce.

The latest national accounts show Australian companies are taking a record share of company earnings in the form of profits.

The latest profit results from Shell, Chevron, Exxon Mobil and BP show record half-year earnings.

Half-yearly profits for all companies together had almost doubled to $US55.2 billion ($79.6 billion), up from $US28.7 billion for the same period last year, the ACTU noted.

“These energy giants are posting staggering profits while fueling our cost-of-living crisis,” ACTU president Michele O’Neil says.

“Their shareholders are pocketing billions while working people are wondering how on Earth they can afford to fill up their car or heat their homes.

“The big oil and gas companies booked super windfall profits while Australian taxpayers have subsidized the bowser price of petroleum.

Vehicle at petrol bowser at Shell and Coles Xpress service station in Brisbane
The latest profit results from big energy corporations Shell, Chevron, Exxon Mobil, and BP show record half-year earnings.(ABC News: Lucas Hill )

“It’s time that big businesses do their part to address the cost-of-living crisis gripping Australians right now.

“If the bargaining system was working the way it is supposed to, workers’ standard of living wouldn’t be hit as hard by big increases in power, gas and petrol prices.”

Productivity first, according to businesses

Business groups argue that for real wages to lift, worker productivity needs to lift.

The Productivity Commission’s interim report confirms that the productivity growth that drives real wages is languishing at 60-year lows, Business Council chief executive Jennifer Westacott says.

“This challenge is monumental because it is productivity that has overwhelmingly driven better living standards and higher wages for Australians since the Federation.

But labor market economists say there should be less focus on the trend in the rate of productivity growth and more attention given to the difference between wage growth and productivity.

Figures from the Center for Future Work, part of the progressive think tank The Australia Institute, show productivity growth has beaten wages growth for over a decade.

That should, in theory, mean a higher rate of pay growth for workers.

A line char shows productivity rising far above wages
Productivity growth has beaten wages growth for over a decade, data from the Center for Future Work shows.(Greg Jericho, ABS)

Impact Economics and Policy lead economist Angela Jackson says stubbornly low wage growth is a symptom of a broken industrial relations system.

She says the basic formula is that inflation plus productivity growth should equal wage growth.

“The system of wage determination and enterprise bargaining hasn’t factored in productivity gains for decades,” she says.

“It’s frustrating.”

The latest private-sector check on corporate profitability may only add to that frustration.

Double-digit rise in private infrastructure company profits

The big end of town, according to the latest gauge of corporate profitability, is swimming in cash.

Consulting firm Deloitte Access Economics has released its quarterly Investment Monitor.


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