Policy report

Wages growth in Australia: evidence and policy evaluation

Wages growth Skilled migration Labour market Industrial relations Collective bargaining Australia

One of the big issues in the 2022 Australian federal election campaign was wages growth. The then Labor Opposition, which won the election, pointed to low wages growth over the last decade, and the current negative real wages growth implied by higher inflation. So wages growth naturally became an issue considered in the new federal government’s Jobs and Skills Summit, out of which came a variety of new policy measures. For instance, the new government is pursuing a return to industry-wide bargaining, investing more in training, and returning Australia to a high level of immigration, among other things.

The government is arguing its policies will boost productivity and hence wages, recognising the strong long-run link between productivity and real wages.

This paper reviews the evidence regarding wages growth in Australia since the 2008 financial crisis and discusses what it means for policy. This includes the pros and cons of new policy measures, such as a return to multi-employer bargaining and a boost to planned permanent immigration, which the current government is planning.

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CIS Policy Paper 47