When was the last time you got a pay increase? Was it anywhere near the rate of inflation?
If it feels as if your wage is shrinking and cost of living pressures are growing, you’re in good company. And it might just be harming productivity. Here’s why.
Labor productivity (measured as gross domestic product per hour worked) has been shrinking for a year now, after decades of reasonable, albeit declining, productivity growth throughout the 1980s, 1990s and the first two decades of the 2000s.
GDP per hour worked, index numbers
198019851990199520002005201020152020 556065707580859095100
All sorts of reasons have been suggested. One is working from home. Commonwealth Bank chief Matt Comyn has ordered staff to return to the office saying there are “certain types of work that are done more effectively in person”.
Reserve Bank research says it might be a resurgence in the proportion of wages set by industry awards rather than workplace agreements, meaning there’s less scope for rewarding performance.
Another is weak wage growth itself.
We must also look at wages. Wages are falling in inflation-adjusted (“real”) terms.
Adjusted for inflation, Australians are being paid less than they were in 2020.
Real average weekly wage expressed in 1994 dollars
199520002005201020152020 02004006008001,0001,2001,4001,600$1,800
Real
Nominal
Average full-time adult ordinary time earnings
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