The Economist - USA (2019-07-20)

34 Asia The EconomistJuly 20th 2019

A

ustralia haslong been at the leading

edge of minimum wages. The state of

Victoria was the second place in the world

to introduce a wage floor in 1896, beaten

only by New Zealand. A landmark legal

case in 1907 took a more expansive view of a

fair wage, ruling that it should be enough to

maintain a family with three children in

“frugal comfort”. Australia is still at it: it

now has the world’s most generous mini-

mum wage, reclaiming a distinction it last

held more than a decade ago.

The oecd, a club mainly of rich coun-

tries, compares minimum wages around

the world by adjusting for inflation and the

cost of living, and converting them into

American dollars. On that basis Australian

workers pulled in at least $12.14 an hour last

year, up by nearly 4% from 2017. That puts

them narrowly ahead of their peers in Lux-

embourg, ranked second, and a whopping

two-thirds better off than federal mini-

mum-wage earners in America (see chart).

Australians may be incredulous to learn

that they are doing relatively well. In recent

years one of their big gripes has been slug-

gish wage growth. The norm in Australia

used to be nominal annual wage increases

of about 3% to 4%. Even after the global fi-

nancial crisis of 2008, wage growth re-

mained strong, thanks in part to the natu-

ral-resources boom. But over the past five

years the resources sector has lost its fizz,

and wage growth has ebbed to about 2% a

year, lower than in America.

That makes the high minimum wage all

the more notable. The Fair Work Commis-

sion, an independent panel that sets the

minimum wage after considering submis-

sions from industry and the unions as well

as academic research, raised it by 3% this

year, after increases of 3.5% in 2018 and

3.3% in 2017. These rises have outpaced

both inflation and broader wage growth,

and have helped give low-end workers a

somewhat bigger share of national income.

It used to be an article of faith among

economists that higher minimum wages

would cause job losses, but data from Aus-

tralia add to evidence that counters that as-

sumption, at least as long as increases are

gradual. A study by the Reserve Bank of

Australia (rba), the central bank, exam-

ined minimum-wage increases between

1998 and 2008, and found no discernible ef-

fect on employment. Similarly, over the

past five years, Australia’s unemployment

rate has fallen steadily.

Thevalueoftheminimumwageisespe-

ciallyimportantinAustraliasincethepay

ofsomanyworkersislinkedtoit.Undera

national systemof industry-wide salary

awards,payinmanyjobs,fromcabincrew

tofuneraldirectors,isineffectindexedto

theminimumwage.Everytimethemini-

mumwagegoesup,sodoesthepayofnear-

lya quarterofAustralians,makingit a pow-

erfullevertoaffecttheeconomyasa whole.

Therbaseemspleasedwiththeboostto

wages.It wantshigherearningstoliftinfla-

tion,whichisbelowitstargetof2-3%.With

thehousingmarketinthedoldrums,the

economyisgrowingattheslowestpace

since2009,threateningAustralia’s28-year

growthstreak.Butlowpayrises,saysPhilip

Lowe,theheadoftherba, harmtheecon-

omymorethanlowhouseprices. 7

Australians benefit from the world’s

highest minimum wage

Wages in Australia

Sun, surf and

bonzer pay

Lotsofdoughdownbelow

Source:OECD *Purchasing-powerparity

Hourlynationalminimumwage

Selectedcountries,2018,$ atPPP*

0 2 4 6 8 10 12

Australia

France

Germany

Netherlands

NewZealand

Britain

Canada

SouthKorea

UnitedStates

As%ofmedianwage, 2017

55

62

48

47

54

46

53

34

60

P

ots of brusheslitter the desk of Zulki-

flee Anwar Haque, a Malaysian political

cartoonist better known as Zunar. Draw-

ings of which he is especially proud deco-

rate the blue walls of his studio in Kuala

Lumpur. Several satirise Malaysia’s dis-

graced former prime minister, Najib Razak,

who was booted from office more than a

year ago, along with his big-haired wife,

Rosmah Mansor. Such cartoons drew the

ire of Mr Najib’s government. Zunar was

charged with multiple offences under illib-

eral laws on publishing and sedition. The

surprise victory in last year’s elections of a

reformist coalition, Pakatan Harapan (ph),

brought his legal troubles to an end. But al-

though phhas stopped persecuting jour-

nalists, it has not, as it promised, done

away with the instruments of repression.

“All the laws that the government used

against me before still exist,” he grumbles.

Dismantling the oppressive systems

put in place by the United Malays National

Organisation (umno), the party that ruled

Malaysia for more than six decades, was

never going to be quick or easy. Under Mr

Najib and, to a lesser extent, his predeces-

sors, the press was cowed, the electoral sys-

tem was rigged, the judiciary and bureauc-

racy were pliant and critics, whether

within or outside the government, were

harassed or imprisoned, often on

trumped-up charges. Officials who com-

plained about corruption at 1mdb, a state

investment vehicle from which $4.5bn dis-

appeared on Mr Najib’s watch, lost their

jobs. Those charged with investigating the

affair say they feared for their lives.

ph, many of whose members were vic-

tims of such abuses, promised to change all

this. Its manifesto was a liberal wish-list of

464 initiatives, including repealing the Se-

dition Act, allowing the press greater free-

dom, reducing the powers of the prime

minister and erecting stronger barriers be-

tween the executive and the judiciary. 

phhas taken some steps in the right di-

rection, most notably by appointing re-

spected figures to pivotal posts such as that

of attorney-general, speaker of parliament

and chief justice. A former campaigner for

fair elections now sits on the Election

Commission. The new head of the Malay-

sian Anti-Corruption Commission, Lath-

eefa Koya, is considered independent. And

in recent days the lower house of parlia-

ment passed an amendment to lower the

voting age from 21 to 18. The shift could en-

franchise almost 8m young voters in time

for the next general election, which is ex-

pected in 2023.

But in other respects, the government’s

record is chequered. An effort to repeal a

law on “fake news”, which allows the gov-

ernment to criminalise unfriendly report-

ing, was stymied in the upper house last

year by the opposition. There has been no

effort at all to repeal or amend a law that al-

lows for detention without trial for 28 days,

which was used to arrest the leader of de-

monstrations against corruption when Mr

Najib was prime minister. And revisions to

other laws, such as the Peaceful Assembly

Act of 2012, which in practice curtails prot-

ests, are seen as inadequate. For example,

the government plans to amend the law to

require protesters to give the authorities

seven days’ notice of a rally or march, rath-

er than the previous ten. That is still far

more, however, than the 48 hours that Hu-

man Rights Watch, an international ngo,

considers reasonable.

Meanwhile, Malaysians continue tobe

targeted under the Sedition Act. An outcry

followed the High Court’s decision this

KUALA LUMPUR

A callow government struggles to keep

its most laudable promises

Civil liberties in Malaysia

Spare change

1