Bosses at several of Australia’s largest companies have warned that the country is heading for a recession and have pointed the finger at a group of Aussies to blame.
Employees who continue to work from home have been cited as one of the main reasons why Australia is heading for a financial crisis.
A Nine Network poll found that several top business figures feared that the habit was lowering productivity, leading to lower economic growth.
Telstra chairman John Mullen accused those who worked from home of abusing the privilege.
Bosses at some of Australia’s largest companies have warned the country is heading for a recession and have blamed a group of Aussies to blame
A Nine Network poll found that several top corporate figures feared the habit would lower productivity and increase the likelihood of a recession
“It’s debatable, but I wonder if the very recent declines haven’t been exacerbated by the trend of working from home since the start of the pandemic,” Mr Mullen said. Australian Financial Review.
“Anecdotally, many people are working harder than ever and are more productive, but I don’t think this is true for everyone.”
The Productivity Commission released its Advancing Prosperity report in March, which found that productivity growth fell to a six-decade low.
The 1,018-page report made 71 recommendations to improve it, including a new visa system that would attract more low-paid healthcare providers from abroad.
At the time, Treasurer Jim Chalmers warned that if productivity did not increase, workweeks would be five percent longer by 2063 and incomes would be 40 percent lower.
Sydney Hydro director Tony Shepherd said productivity was poor during the decade leading up to Covid which hit Australia in early 2020.
“During the pandemic, working from home, absenteeism and supply chain disruptions all negatively impacted productivity and continue to do so,” he said.
Mr Shepherd also lashed out at the changes in the Albanian government’s labor relations, which have drawn bitter criticism from the business community.
“The changes to our labor laws are misleading and will reduce productivity and add cost and stress to an already struggling economy,” he said.
The changes in labor relations focused on closing the gender pay gap, expanding multi-employer bargaining and introducing flexible scheduling rights.
Mr Shepherd supported the rapid succession of 12 rate hikes by the Reserve Bank, saying they were necessary to fight inflation because the alternative was stagflation, with both unemployment and prices continuing to rise.
Echoing the words of former Labor Prime Minister Paul Keating, who oversaw Australia’s last serious economic downturn in 1991, Mr Shepherd said the looming recession could be one the nation ‘must have’.
He ominously predicted that the “commodities sector won’t save us this time” and supported the Reserve Bank’s rapid series of 12 rate hikes to slow the economy, warning that the alternative would be stagflation, which is both rising unemployment and inflation.
Telstra chairman John Mullen says while ‘anecdotally’ people are working harder than ever, he’s not sure if this applies to everyone
A technical recession is defined as two quarters of the economy shrinking as measured by GDP.
Canstar financial expert Steve Mickenbecker told Daily Mail Australia he was not too pessimistic about Australia’s economic future and put the odds of a recession at 50:50, with foreign factors having a major impact.
“There is still a level of buoyancy,” he said of the Australian economy.
“Job growth is up for May and this is after 13 months of rate hikes.”
However, Mr. Mickenbecker reiterated bosses’ concerns about low productivity.
“The statistics show that productivity in Australia has not grown at all or not at all in recent years,” he said.
“If wages go up and productivity doesn’t go up, it might be a response to higher prices, but ultimately they contribute to those higher prices.
“There’s just no doubt about it, productivity needs to go up. If you start expecting higher wages and higher salaries at the end of the day, it will become inflationary without increased productivity.
‘That’s where we are now. Higher wages contribute to inflation.’
Mr. Mickenbecker agreed that working from home was probably not helping productivity.
“It’s a more challenging landscape for employers to manage inputs,” he said.
‘The problem with working from home is that the collaboration is starting to falter a bit.
“There’s not anyone at the next desk that you can say ‘how do you do this or what if we try this, you don’t get those conversations very regularly.
Matt Barrie (pictured), founder and CEO of Freelancer.com, has warned that Australia is on the brink of recession
“Those elements of creativity and spontaneity in the workplace are starting to fall away and so is some of the culture and team spirit.”
On Wednesday Matt Barrie, founder and CEO of the employment agency Freelancer.com weighed in on the economic debate with some gloomy predictions about where Australia is headed.
He claimed that artificially inflated housing markets resembled a “Ponzi scheme” and were the “bubble of all bubbles.”
Mr Barrie compared Australia’s current economic climate to the global financial crisis triggered by the 2008 US housing collapse.
“It’s exactly the global financial crisis that we’ve seen in America and is playing out here in Australia today,” he told Australian online broadcaster ADH TV.
Mr Barrie, who rose to national prominence for opposing Sydney’s exclusion laws in 2016, said every Australian realizes that ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket.
He said Australian workers have been forced to take out huge mortgages because of extraordinary house prices, which have been pushed higher and higher by importing more and more people to support rising demand.
“The only reason house prices are rising is because we’re bringing more people into the country,” he added.
“We have brought 620,000 students to this country, and everyone knows they are not students, but cheap labor who have been deployed to support GDP and work in 7-11 or drive an Uber.
Canstar finance expert Steve Mickenbecker says rapid rise in interest rates should start to drive back consumer spending
“It really is late-stage desperation in a Ponzi scheme. The housing market, which has been rising relentlessly for 60 years, has led to a Ponzi out of all proportion – it is the housing bubble of all bubbles.’
A Ponzi scheme takes the money from new investors to support illusory profits, dividends and valuations that dry up once the cash inflow stops.
Mr. Mickenbecker disagreed entirely with this analysis.
“I wouldn’t call the real estate market a Ponzi scheme in the long run,” he said.
However, he admitted that the real estate market seemed unsustainable during the Covid period.
“The rise in prices before the Reserve Bank entered this cycle of rising rates certainly had elements of that,” he said.
“Before the Reserve Bank moved, it was an irrational ‘gotta jump in’ fueled by an irrational desire to buy real estate at a higher price.”
However, he thought demand from immigration and other visitors to Australia, along with the low supply, gave the market a firm footing.
“I look at long-term real estate in Australia and think there are sustainable reasons for real estate rising,” he said.
“There is a good basis for real demand for real estate, so I expect prices to rise again. Current prices and recovery are really just a function of low supply.”