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The Australian basic wage case of 1930–1931: Judge-made economic policy

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  • Keith Hancock

Abstract

This essay examines a significant event in Australia’s economic and labour relations history in which an industrial relations court acted against government policy but in line with the advice of professional economists to impose a general wage reduction. This determination, unique during the period of central wage fixation, was made as the country fell into deep depression in 1930–1931. Arguments that a reduction in purchasing power would exacerbate the depression did not prevail over expert economic advice that wage reduction would lessen the structural consequences of reduced rural export income. The Court determined that the loss of real national income had to be accommodated without a wider package of measures such as exchange rate depreciation or expansionary monetary and fiscal policies. The impressive endeavours of the Court to understand and respond to a difficult economic reality represented a significant elevation of the status of wages policy in macroeconomic management – one that was to last for 60 years.

Suggested Citation

  • Keith Hancock, 2013. "The Australian basic wage case of 1930–1931: Judge-made economic policy," The Economic and Labour Relations Review, , vol. 24(2), pages 181-204, June.
    • Handle: RePEc:sae:ecolab:v:24:y:2013:i:2:p:181-204
    DOI: 10.1177/1035304613482654
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    References listed on IDEAS

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    1. D. B. Copland, 1930. "Leading Problems Of Australian Transport," The Economic Record, The Economic Society of Australia, vol. 6(2), pages 2-10, August.
    2. Keith Hancock, 2004. "Economists and Australian Wage policy Before World War II," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 7(4), pages 413-438, December.
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      More about this item

      Keywords

      Arbitration; central wage fixation; Great Depression; macroeconomic management; wages policy;
      All these keywords.

      JEL classification:

      • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
      • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
      • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
      • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
      • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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