Briefing paper

Kick-starting wage growth: what the Commonwealth government could do now

Economics Wages Wages growth Australia

Australia’s economy continues to endure a period of uniquely and stubbornly slow growth in wages and salaries. Since 2013, wage growth has decelerated to the slowest sustained pace since the end of the Second World War. Measured by the ABS’s Wage Price Index (WPI), nominal wages have grown over the last 5 years at an average annual rate of barely 2% – about half their pace in previous times. And by other measures (such as ABS series on average weekly wages and labour compensation per hour of work), nominal wages have grown even more slowly. Real wages have been static during this time, as nominal wages have just kept pace with rising consumer prices.

A growing range of economic and policy experts have confirmed the multifaceted and serious consequences of stagnant wages: including weak consumer spending, household financial fragility, slower job-creation and economic growth, below-target inflation, slower growth in government revenues, and lasting damage to equality and social cohesiveness.

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