Proposed reforms to Australia’s industrial relations laws are likely to support higher coverage for collective bargaining in the national labour market, and provide a boost to stagnant wage growth according to new research from the Centre for Future Work.
The report reviews historical data on the erosion of collective bargaining in Australia, and its close correlation to the slowdown in wage growth visible after 2013.
Key Points:
- Each one percentage point loss of bargaining coverage has been associated with a reduction in annual wage growth of 0.15 percentage points
- The decline of collective bargaining coverage (which fell by almost half in the private sector since 2013) explains over 50% of the change in wage growth during that same time
- Rebuilding coverage toward pre-2013 levels will lift nominal wage growth by 1.6 percentage points per year
- Just one year of faster wage growth would boost annual earnings for a typical worker by $1,473 and a cumulative total of almost $24,000 over five years
“Restoring collective bargaining is vital to any strategy to get wages growing again in Australia,” said Dr. Jim Stanford, co-author of the report and Director of the Centre for Future Work.