Australia’s recent economic growth is encouraging, but its fuelled by something worrying. Greg Jerico’s recent Guardian article:
Such [economic growth] improvement would generally reflect a strong growth in household income. After all, that is a 3% increase in real terms, so you would think it means incomes are rising solidly. But what the figures reveal is that the increase in spending by households is coming from them reducing the amount they are saving.
Employers have absolutely no reason to be complaining about wages at the moment or whining about losing international competitiveness – especially with company profits over the past two years rising by 28%.
People only spend their savings when they feel they don’t have a choice. Which also leads to high credit card and personal loan debt.
Savings are supposed to be for weathering storms, but if it’s being regularly spent now to offset wages not keeping up with prices, it signals something wrong with the economy. Well, if you think the economy is there to serve people, not vica versa.
The smashed avocado debacle last year highlighted the patronising, dismissive tone many of the financially stable have for those on lower incomes. Granted, financial literaly isn’t where it should be, in large part because we’re taught quadratic equations in high school instead. I don’t buy the conspiracy theory that we’re kept in the dark to prop up the financial industry, but it’s tempting!
But back on point, if people are working themselves to the bone, it’s perfectly reasonable to expect them to want to blow off a bit of steam. A holiday or break from the rat race may in fact be the only thing keeping them sane.
There’s also our guarenteed 9.5% superannuation savings from our employers, somewhat equivilent to the Singaporean CPF. But even that can’t be relied upon, as the current mob want that going into further housing market inflation. It’s also routinely stolen or deferred by employers who either use it as a bank, or hope their employees aren’t checking.
I say all of this as someone who has no debt, has automatic savings and investments, salary sacrifices extra to super, and uses credit cards as nothing more than point-generating machines. You shouldn’t need to add such a disclaimer, but not doing so relegates you to the bludgers and leaners camp for the smashed avo economists.