Nov 14, 2017

Why is wages growth so low? Experts can’t seem to agree.

Why have Western economies struggled with low wages growth in recent years? We asked economists and sector representatives for their perspective, and their answers varied widely.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Tomorrow's wage price index (WPI) data for the September quarter is expected to show the first rise in the rate of wages growth since mid-2016, to above 2% per annum, propelled by the Fair Work Commission's June annual wage review. What's driven the long period of low wages growth across Australia and other Western economies in recent years? We asked a number of economists and sector representatives what they saw as the common factors. Their (edited) thoughts:

Saul Eslake, independent economist and vice-chancellor’s fellow at the University of Tasmania

The "common factors" are:

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10 thoughts on “Why is wages growth so low? Experts can’t seem to agree.

  1. Graeski

    I don’t have a degree in economics, but I put down to to capitalism, the infinite greed of the wealthy, and their control of both government and press; for the most part.

    1. Robert Smith

      Why didn’t any of these economists mention any of these points? Maybe the editing cut them out.

  2. AR

    It is a continuing mystery that economists are still fed, let alone not shot on sight.
    When have any of their prognostications ever been found to be worth pinch of the proverbial?
    The only thing more useless that a consensus of economists is reportage thereupon.

    1. Bethany Challen

      Ouch!! I wonder if Richard Denniss reads Crikey?! He’s one of the good guys, I promise!

    2. 124C4U

      Five “Economists “and about fifteen different explanations!
      Anybody could examine a chickens entrails contents and come up with a better result.
      Economists are the worlds biggest Con Artists their methods have no repeatability in results produced. Therefore not science.
      I agree don’t even feed the phonies, let alone give them their filmstar wages.

  3. Draco Houston

    David Peetz gives the only sensible answer. Wages are lower because labour (not as in the party) aren’t winning better wages. The rest dance around this but mention things that might contribute to this problem.

    That begs the question: Why is labour not winning better wages? Theories abound. Mine is wage labour is dying.

  4. Bethany Challen

    I would have thought economists would have used the basic economic rationale of supply and demand! Currently labour is not a scarce resource hence it is cheap cheap cheap! The backsliding of resource industry wages here in the West as the mega projects (LNG/Iron Ore etc) transitioned from construction to operations says it all!

    1. Bethany Challen

      Oh and additionally organisations are cutting staff through loading more responsibilities onto one position. Now instead of having a Health & Safety Advisor AND and Environmental Advisor AND a Quality Advisor they cram it all into a combined HSEQ role and magically expect that one person can do the work of three… and because people need a job in a tight market they take it on even at the lower wage. I’m sure other industries are job loading as well, I just don’t know them well enough to tell by the job advertisements!

  5. [email protected]

    The social contract between capital and labour has collapsed. While the workforce regrets that now, in time management and capital holders will regret it too – possibly starting with the banks.

  6. Itsarort

    Let’s face it, this country has a Federal government for only two reasons.1. A common currency is stronger than five or six different ones. 2. Henry Parkes and some of those other bastards back in the 1880’s/90’s, were absolutely shit scared that a collective union in Australia could easily become far more powerful than any State government. Now imagine, just for a second, that unions in the 21st century could go on strike to support other unions without breaking the law.

    So, forget the prattling’s of economists, low wage growth is caused by the collective lawmaking from both sides of government, Federal and State.

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