“In a Research Note released today, Ai Group debunks the claim by the ACTU[1] that real wages growth has not kept pace with productivity growth in Australia,” Innes Willox, Chief Executive of the national employer association Ai Group said today.
“The research shows that the ACTU claim is based on a sub-standard measure of productivity.
“In our examination of the ACTU’s claim our Research Note, Have Real Wages Decoupled from Productivity Growth in Australia?, finds the claim is based on a quick and dirty measure of productivity growth that is particularly poorly suited to measuring Australia’s productivity record over the past quarter century.
“The productivity measure relied on by the ACTU is sub-standard in large part because it does not correct for the very large increase in the quantity of capital used in production over the period the ACTU considers. This was closely linked to Australia’s mining investment boom.
“If the more rigorous and widely accepted measure of productivity growth (Multifactor Productivity) is used as recommended by the Australian Bureau of Statistics, the clear evidence is that wages growth and productivity growth have tracked very closely over this period.
“This highlights the flaws in the ACTU’s choice of labour productivity as the benchmark against which to compare real wages growth.
“This is not about semantics. It is important that we understand the performance of wages and productivity from a sound base, especially in discussions at the upcoming Jobs and Skills Summit. You cannot have a worthwhile conversation or develop a plan for action if you are not on the same page,” Mr Willox said.
Ai Group’s Research Note Have Real Wages Decoupled from Productivity Growth in Australia? is available here.
1 ACTU, (2022), An Economy that Works for People, p. 16.
