No recession for some

August 22, 2009

On August 12, Australia's formerly government-owned telecommunications
company, Telstra, announced a $4 billion profit for the 2008-09 financial year.

Telstra's profit increased 10.3% on the previous year, at the same time as it shed 2881 jobs. Telstra has cut 11,665 jobs over the past four years, the August 13 Sydney Daily Telegraph said.

The same day, the Australian said former Telstra CEO Sol Trujillo received
$9 million from the company over his four years at the top. This included a "termination payout" of $3.76 million.

Telstra shareholders, meanwhile, will receive a total dividend for the financial year of 28 cents per share. With Telstra shares trading at $3.61 on August 18, this represented a 7.8% annual return for shareholders — a tidy profit during a recession.

Telstra shareholders and Trujillo are not the only ones cleaning up during the recession.

Profits for the Newcrest goldmining company were up by 85% on the previous financial year's result, said the August 18 Australian Financial Review.

Meanwhile, multinational petrochemical company ExxonMobil signed a contract to sell liquefied natural gas to the Chinese market, worth $50 billion over 20 years, from the yet-to-be-developed Gorgon gas field in Western Australia.

Construction of the Gorgon project was expected to provide only 6000 jobs.

Profits have fallen significantly for many companies, however. BlueScope Steel, for instance, announced a 93% contraction in profits to $67 million for the financial year, said the AFR. Qantas profits fell to $123 million, an 87% fall, the August 20 Sydney Morning Herald said.

Qantas promised "spending cuts" of $1.5 billion over the next three years. CEO Alan Joyce refused to rule out further job cuts on top of the 3250 workers sacked over the past 18 months. Qantas has also made significant "savings" by slashing pay and conditions offered to its Jetstar employees.

BlueScope (formerly BHP Steel) made huge cuts to its workforce under federal government-sponsored restructuring in the 1980s and '90s.

There are expectations that profits will increase.

"Analysts are becoming increasingly united in the belief that the worst of the decline in earnings is over", the August 18 AFR said, "which implies that profits will rise in the coming December half among banks, resources and industry stocks."

At the other end of the spectrum, on August 12, the Australian Bureau of Statistics (ABS) released its Labour Price Index figures for the three months ending June. The figures showed the slowest increase in wages growth in three years, said the August 13 SMH.

The ABS figures show increases in wages of only 0.8% for the quarter. For non-government workers, it was only 0.7%.

The fall in wages growth does not even include the impact of the (un)Fair Pay Commission's decision to freeze the wages of 1.3 million low-paid workers who rely on awards. That forgone wage increase will only take effect from December.

Declining wage increases, combined with losses of hours and projected increases in unemployment, have led economists to warn that household incomes are likely to fall in the second half of the year.

"So if we combine the slowing in the wage rates data today with the recession, like
hours worked in the economy ... today's data indicates a very significant moderation in household income in the second half of this year", UBS economist George Tharenou told News Limited's Perthnow website on August 12.

Tim Gooden, Geelong and Region Trades and Labour Council secretary told the August 12 Geelong Times:"I don't remember employers demanding wages be fixed to the market when the economy was booming and record profits were being made.

"If this was the case workers would have been receiving 30% pay increases instead of
the average 3% received over the last few years."

Figures also indicate that women's wages have fallen further behind men's. The Average Weekly Ordinary Time Earnings figures, released by the ABS on August 13, showed that women's average full-time wage had fallen to a 21-year low of just 82.5% of men's, said the August 13 Age.

The most disadvantaged are doing it hardest. One third of charities had reported increased requests for crisis accommodation and food parcels of up to 50%, the August 19 SMH said, and 65% of charities reported some increase in demand.

Unemployment and lost hours are impacting harshly at a time when corporate donations are also drying up, the article said.

You don't have to be an economist to interpret these trends. While working people, the unemployed and other welfare recipients are paying for the recession with stagnating wages and food parcels, many at the top end of town are doing quite nicely — even better than before.

The recession (at least for the majority) has given bosses the excuse to cut jobs, cut hours and restructure. Many jobs will not return as the economy goes into "recovery".

Working people have been asked for restraint and falling wage rates are the result. A wage freeze, lower hours, growing unemployment and poverty are their only rewards.

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