Productivity in the Real World
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Media release
Australia does not have a “productivity crisis” – new research
Claims that Australia faces a productivity crisis are overblown. Weak productivity didn’t cause the current problems facing Australian workers (falling real wages, high interest rates, unaffordability of essentials like housing and energy). Nor will higher productivity fix these problems.
Faith that higher productivity will automatically trickle down, to be shared by all workers, is unfounded. Pro-active measures to lift wages and living standards are needed if stronger productivity growth is to support stronger living standards.
This report presents empirical evidence showing that productivity growth in recent decades has not been equally reflected in higher real wages and better living standards.
- Productivity grew four times faster since 2000 than average wages adjusted for consumer prices; it grew almost twice as fast as average wages adjusted for producer prices.
- If workers had received wage increases since 2000 that matched productivity growth, wages would be as much as 18% higher than they are at present – worth $350 per week, or $18,000 per year.
- Over time, the failure of wages to keep up with productivity has created a “productivity debt” effectively owed to workers, worth hundreds of thousands of dollars per worker.
The fruits of productivity growth have been disproportionately captured in the form of business profits, dividend payouts, and executive compensation. It is only through deliberate measures to ensure productivity growth is reflected in improved compensation and conditions for workers that Australian workers can have any confidence their contributions to improved productivity will pay off in better lives. Repairing the link between productivity and mass prosperity, by strengthening the institutions of distribution and pushing wealth downward (rather than hoping it will trickle down automatically), is as important to Australia’s future productivity as any labour-saving technological breakthrough.
The report concludes with a broad agenda of high-level policy themes that should be pursued to challenge and support Australian workplaces to become more productive – and to ensure the resulting gains are broadly shared.
Factsheet Australia does not have a "productivity crisis" - new research