New wages research shows that 95 per cent of workers are getting pay rises in line with productivity growth, after unions and politicians claimed Australians were missing out on their fair share.
The report, titled Productivity growth and wages – a forensic look, looks to set the record straight on wages amid a storm of claims from all sides of business and politics about whether Australians were getting their fair share.
In an acknowledgement of the debate, the Commission pointed out the differences in the method which have led to criticism in other reports and resulted in “sometimes misleading” findings.
“Unfortunately, debates about the extent of wage decoupling (the gap between wages and productivity growth), its sources and its implications are often dogged by differences in the methods and data,” they said.
“This is because analysts can pick and choose among a wide range of measures of real wage growth and their choices can lead to different, sometimes misleading conclusions.”
While the report does not directly mention which pieces of analysis it believes to be flawed, the results findings reject a number of claims put forward by unions and left-leaning think tank The Australia Institute.
A report by the Australian Council of Trade Unions and Canadian economist Jim Stanford, promoted by The Institute, suggested Australian workers were receiving an ever smaller share of income and claimed that corporate profits, not wages, was the source of higher inflation.
That analysis has now been used as justification for an ACTU backed inquiry into price gouging and has also been seized upon by the Greens in their push for a super profits tax on business.
The only sectors where decoupling between the two factors emerged were mining and agriculture, the Commission wrote, but in both cases the break could be explained by the effects of international commodity prices on pricing in domestic markets.
According to the report, Australians would experience a fall in their share of labour income if the economy was showing signs long-term decoupling between wages and productivity.
The Commission found that was not the case, noting that outside of agriculture and mining “the labour share of income has declined by less than 1 percentage point” over 27 years from 1994-95 to 2021-22.
It added that aggregate analysis of the economy, which looks at all industries together, masks this fact, as the agriculture and mining sectors account for a large share of economic output despite only accounting for just over four per cent of the workforce.
This distorts the picture, the Commission argues, appearing to show that decoupling is widespread across Australia and has a significant impact on wages throughout the economy.
(ABC)
