Ten years of productivity growth, but no increase in real wages
Ten years of productivity gains has resulted in a zero increase in real hourly wages
If there is one maxim that gets trotted out whenever talk turns to wages, it is that all we need to do is improve productivity and then wages will grow faster.
The problem is that productivity growth should lead to stronger wages growth, but it is not automatic. When the bargaining system is so weighted against workers, rather than lead to higher wages, productivity improvements just lead to higher profits.
Since March 2012, productivity across the economy has increased 11%, in that same time real wages per hour have fallen 0.2%.
Yes productivity growth is good for the economy, but if the industrial relations system does not enable fair bargaining, it is not good for workers.
Related research
Between the Lines Newsletter
The biggest stories and the best analysis from the team at the Australia Institute, delivered to your inbox every fortnight.
You might also like
Australians have lost 14 years of progress on living standards. A wages breakout? Please. If only
Remember all that talk about wage-price spirals? About wages driving inflation? All that worry about a wages breakout causing interest rates to rise? Ahh yes, good times.
In worrying about productivity growth, the RBA has strayed beyond its remit
It’s official: the Reserve Bank of Australia will have its board split in two, and two new appointees will join the reconfigured monetary policy board, whose job it is to make decisions on interest rates. The move was recommended by an independent review panel in 2023. The new members of the monetary policy board, one
The big error at heart of ‘right to disconnect’ opposition
This week, Parliament is set to approve a new set of industrial relations reforms, bundled in the second part of the “Closing Loopholes” bill.