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Economics Analysis

Company profits soar and wages fall while the media continues to mislead

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Cartoon by Mark David / @MDavidCartoons

The process of shifting wealth and income from the poor and middle to the rich is continuing and accelerating. Alan Austin examines the latest official data.

FOR THE SECOND consecutive quarter and only the second time since 1959, the share of Australia’s income going to employees is below 50%. For the first time ever, the share going to investors is above 31%.

The recent national accounts and business updates from the Australian Bureau of Statistics (ABS) show the shift in income from the poor to the rich and from Australians to foreigners is speeding up.

The ABS confirms several sectors of the economy are still booming despite the pandemic. Let’s examine them briefly.

We can take 2012-13 as a base year as that was when the last of the developed countries – Greece, Italy and Spain – emerged from the recession caused by the Global Financial Crisis.

Manufacturers make hay

Manufacturing profits have surged since 2013, with electrical and electronic machines and optical and medical apparatus in strong export demand. In the 12 months to September, manufacturers recorded more than double the 2013 profits.

Manufacturing profits 2014-20 B.jpg

Miners move further ahead

Since 2013, profits from mining – which comprised 68.1% of last year’s exports – have increased in four years and declined in three years. But the increases have more than compensated for the declines. Mining profits this year were also more than double 2013 levels.

Mining profits 2014-20 B.jpg

Other sectors to have experienced profit booms since 2013 include gas, electricity and water, accommodation and food, and administrative and support services.

Sectors to have declined include finance and insurance, transport, rental, real estate and media and communications.

Media and communications slump

This broad group includes the internet, radio, television, newspapers, magazines, books, films, videos, music recording, libraries and related industries. It enjoyed a slight profit boost in 2014 and 2017 but went backwards in other years.

Media profits 2013-20 B.jpg

Total profits economy-wide

The critical data is for the entire economy. The ABS confirms strong overall profit gains over the last four years. Total profits were 29.4% higher in 2017 than in 2013, 24.6% higher in 2018, a thumping 58.0% higher in 2019 and, despite a correction this year, still an impressive 53.6% higher.