Nothing is wrong with my memory. Percapita recession officially in 2019.
https://www.abc.net.au/news/2019-03-06/gdp-q4-2018/10874592?utm_campaign=abc_news_web&utm_content=link&utm_medium=content_shared&utm_source=abc_news_webYet wages continue to lag
March 2000 = 100. Calculations from ABS Australian National Accounts, Consumer Price Index and Wage Price Index; and RBA Consumer Price Inflation. Real wages have been adjusted to exclude effects of the GST's introduction in 2000. Source: ABS; RBA
These two points demonstrate that productivity is no magic bullet for the other challenges facing Australia’s labour market.
Nor is it credible to blame lack of productivity for another big issue on the summit agenda: the historically weak growth in wages over the past decade.
Business leaders like to insist wage increases aren’t possible without productivity growth. But the actual problem for the past decade has been the opposite: productivity grew while real wages stagnated – and are now falling rapidly due to the surge in inflation.
In fact, the relationship between the two (which many economists assume to be automatic) has been broken for much longer.
Since the mid-1970s, economic and labour market policy in Australia deliberately undermined wage growth through measures such as weakening collective bargaining, downgrading the award system to a safety net, vilifying and policing unions, and (for many public sector workers) simply dictating minimal wage gains.
Not surprisingly, all this kept wage growth well behind productivity. As a result, the share of labour compensation in GDP has fallen by 13 percentage points since the mid-1970s, reaching an all-time low of 45% this year.
The share of corporate profits in GDP, not coincidentally, increased by a similar margin, and is now at record highs.
These tectonic shifts in national income distribution refute the common assumption that workers are automatically paid according to their productivity.
Workers can be rightly sceptical that a generic commitment to revitalising productivity growth will automatically solve the problems they face – falling real wages, endemic insecurity and the erosion of collective representation.
To build a genuine consensus on productivity, therefore, the jobs summit must also advance a convincing vision for how the gains from productivity growth will be more fairly shared.
This article was written by Honorary Professor Jim Stanford from the Department of Political Economy, and was originally published in The Conversation.
Hero image: Adobe Stock
I make the case that real wages were kept down while productivity went up, it's hard to see how that could not lead to a percapita recession while the same mindset at the top that create those conditions stayed in place, all it took was a growing proportion of the population to experience a percapita recession as individuals to tip the scales over into a percapita recession according to the official numbers
The legacy of the Abbott Government unbalanced our economy and made us more vulnerable. There was no way we could have avoided a per capita recession with the numb nuts we had as a Federal Government at the time. All it took was time to make it official.
