A comprehensive review of Australian wage trends indicates that wage growth is likely to remain stuck at historically weak levels despite the dramatic disruptions experienced by the Australian labour market through the COVID-19 pandemic. The report finds that targeted policies to deliberately lift wages are needed to break free of the low-wage trajectory that has become locked in over the past nine years.
The report, The Wages Crisis: Revisited, authored by Professor Andrew Stewart (Adelaide Law School), Dr Jim Stanford (Centre for Future Work), and Associate Professor Tess Hardy (Melbourne Law School), updates analysis from their 2018 book.
Key Findings:
- Annual nominal wage growth recovered after initial lockdowns – but rebounded only to the same slow pace (just above 2% per year) recorded prior to COVID
- Traditional market forces did not cause the wages crisis, and market forces are unlikely to be able to fix it
- Nine policy and institutional factors explain the deceleration of wages, including erosion of collective bargaining, inadequate minimum wages, public sector pay restraint, and widespread wage theft
- Nominal wages should grow faster than 4% per year in coming years to restore healthy relationships with productivity growth, inflation, and national income distribution
“It is striking that despite so much turmoil in our labour market during and after the pandemic, wage growth is still stuck at historically weak rates,” noted Professor Andrew Stewart.