Boost productivity or suffer a pay cut, experts warn
Australia's declining productivity over the past decade has reportedly worsened because of the COVID crisis. And unless productivity recovers, chances of wage increases across the country look grim, two experts said.
Philip Lowe, governor of the Reserve Bank of Australia, first sounded the alarm: Australia would need to bolster productivity growth. Otherwise, wage increases of over 2.5% would be unsustainable, especially amid inflation.
“The best way to achieve a moderation in growth in unit labour costs,” Lowe said, “is through stronger productivity growth.” Reviving productivity would lay down the groundwork for “durable increases in real wages” and national wealth. This in turn would free up greater resources for funding public services.
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Meanwhile, Gary Banks – who once served as productivity commissioner – is warning workers against the possibility of suffering a $10,000 pay cut in the long run if Treasurer Jim Chalmers fails to lift living standards. Banks’ call to action is outlined in the 70 recommendations presented by the Productivity Commission, the Australian Financial Review reported.
In March, the Commission released the report ‘Advancing Prosperity,’ which details how the Albanese government can raise living standards by adopting technology.
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Speaking before the CEO Institute in Melbourne, Banks said: “The current flurry of regulatory changes – under the banners of ‘getting wages moving’, ‘job security’ and ‘equality’ – are likely to impede the flexibility and ‘dynamism’ that is integral to productivity growth and higher real wages.”
For his part, Chalmers believes that upskilling and reskilling workers – along with greater tech adoption – remain the cornerstone of the Albanese government’s productivity reforms but that such changes would require support from state governments.