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Australia's Declining Wage Growth Result of "System Working as Intended"

In August of 2022 Australia's wages had risen at their fastest rate in almost eight years. However this was still less than half of Australia' rate of inflation. Furthermore the share of Australia's GDP flowing on to Australian workers has steadily declined since the Coalition government came to power in 2013, dropping from 53.2% in 2013 to 50.6% in 2022.

A downward trend line with the text "Wage Growth" where the word "Growth" has been crossed out with a red line.

As explained by Richard Denniss for The Guardian:

"To put that decline into context, if the wage share of GDP had remained steady since Tony Abbott came to power, Australian workers would be taking home an additional $49bn in their pay packets this year. To put that in perspective, we only spend $51bn on the entire aged pension."

2022, wages for those in the private sector grew at only 1.4% above inflation. This is compared to period of the Rudd and Gillard Labor governments where the same wages grew at 4.2% above inflation. It has been suggested that if the average Australian worker saw their wages grow at the same rate achieved by the previous Labor government, they would be earning an average of $250 more per week. According to Mr. Denniss Australia's low wage growth has been by design:

"In the great “whodunnit” of low wage growth in Australia, big business lobby groups are quick to provide their alibis for why they can’t give their workers a pay rise. But while everyone seems to have an excuse, the evidence is clear: corporate profits are up 20% through the pandemic, the first time in Australian history where profits have increased, far outstripping wages. Low wage growth in Australia didn’t happen by accident. It’s the system working as intended. The only question is whether politicians will keep blaming workers for their lack of bargaining power – or start trying to fix it."

Sources & Further Reading

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