Australia’s state and federal governments could help solve the problem of stagnant wages by better leveraging their own spending power. New research from the Centre for Future Work demonstrates a strong connection between government spending and working conditions across the economy.
Three main avenues for government spending to lift wages:
- Direct work and production within government departments and agencies (the public sector)
- Arms-length service-producing organisations which depend on government funding (the non-profit sector)
- Private-sector firms which supply government and public agencies with goods and services
Australia’s government sector accounts for total expenditures of over $660 billion per year (36% of GDP), with direct public sector employment of close to 2 million workers.
“Governments don’t pursue obvious opportunities to actually achieve wage growth by linking labour standards to their own expenditure policies,” said Dr. Jim Stanford, Director of the Centre for Future Work.