Wage growth has been stagnant for years. Why?


A new report indicates that while worker productivity is way up, wage growth for the majority of Australians is stagnant. What’s behind this negative trend? And what are the repercussions for workplaces?

Some good news first: Australian labour productivity is outstripping comparable developed nations. As of June 2016, the economy grew 3.3 per cent, and has bucked the global trend by weathering 25 years without suffering a recession. Before getting too carried away with national pride, brace yourself for the bad news. All this success has come on the back of an increasingly impoverished middle-class. Australians are experiencing a three-year decline in wage growth and significant projected declines in their disposable income, according to new research from the McKell Institute, a progressive think-tank.

This isn’t part of a global trend. In the US and Canada, middle-class incomes have risen since the GFC and are continuing to rise, whereas incomes in Australia are in reverse gear. The McKell report says the average Australian annual income has seen a 2.7 per cent reduction since 2012, and concludes that wage growth will stall in the coming years.

“Currently, the average weekly wage for an Australian is $1,145.70. However, this is expected to only grow in real terms to $1,243 per week by 2020. This growth is incredibly slow by Australian and international standards alike, and highlights the threat to the continuation of Australia’s middle-class standard of living,” says the report.

Labor leader Bill Shorten, commenting on the figures at the McKell Institute on Thursday, says: “We must begin by recognising existing insecurities and frustrations are not imagined, or insignificant. Millions of Australians are working harder and longer than they did a decade ago – but have less to go around each week.”

Rising levels of financial stress due to stagnant wage growth manifest most visibly in personal debt default, negotiated compromises with creditors and bankruptcy. 

Financial issues are the chief cause of stress and anxiety among Australians. The Stress and Wellbeing in Australia survey and the Australian Psychological Society both report increasing levels of stress and distress since 2011. It’s particularly evident among younger people who have been locked out of the property market and who are saddled with high levels of debt after completing a university degree.

These tensions and anxieties around financial insecurity naturally spill over into workplaces. While it’s helpful to be aware of the bigger context, what can human resources usefully do to alleviate workplace stress?

First of all, this is a health and safety issue and comes under the OHS Act. As such, employers are required to address workplace stress using a risk management framework.

Employee-focussed approaches such as counselling, relaxation training, time management skills and stress management training can help staff to develop greater resilience to deal with personal and professional anxiety.

Stress management programs usually teach people about the nature of stress and its effect on health while equipping them with skills to reduce symptoms such as sleep disturbances. They are also relatively inexpensive to implement. Mindfulness or meditation courses have also been shown – repeatedly – to have a positive effect on mood and anxiety.

There is still a great deal more that workplaces can do. A recent survey by MinterEllison shows that 56 per cent of respondents reported an increase in the number of mental health cases year-on-year, with the two most common issues being depression and anxiety. Despite this, a majority of participants said they don’t measure the impact of staff mental health issues in their organisation and 74 per cent lack formal and specific mental health policies or procedures.

Given that the Australian workforce is pulling its weight and driving economic prosperity, the demand for employers to start investing much more in the health and wellbeing of their employees grows ever louder.

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John
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John

Pretty darn basic – people don’t have the confidence to blow money.
The increased productivity is expected (it’s not a bonus), that’s why they are still at the office (instead of laid off).

Sandra De Kock
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Sandra De Kock

I must be a bit thick but tell me again how the fact that people are earning less is suddenly a reason to roll out Health and Safety? There is evidence put forward that a counselling session is going to improve a workers income level or have I missed something important here?

Tasman McManis
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Tasman McManis

The level of wages growth and salary budgets looks to be closely aligned with the increase in overall living costs. Perhaps we need to look more closely at the flexibility of our labour laws and the overall level of government regulation. It seems to me that we have become a very conservative nation that is resistant to change in many different areas of life. This inhibits our ability to adopt new ideas and to be nimble to the changing conditions in the world economy.

Joe Morrison
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Joe Morrison

Australian workers have largely abandoned their trade unions. In the circumstances, it’s inevitable that they’ll lose ground over time without effective workplace advocacy. I would also say that unions have become less effective advocates in recent years and they need to refocus on their core business instead of internal politics and perks.

More on HRM

Wage growth has been stagnant for years. Why?


A new report indicates that while worker productivity is way up, wage growth for the majority of Australians is stagnant. What’s behind this negative trend? And what are the repercussions for workplaces?

Some good news first: Australian labour productivity is outstripping comparable developed nations. As of June 2016, the economy grew 3.3 per cent, and has bucked the global trend by weathering 25 years without suffering a recession. Before getting too carried away with national pride, brace yourself for the bad news. All this success has come on the back of an increasingly impoverished middle-class. Australians are experiencing a three-year decline in wage growth and significant projected declines in their disposable income, according to new research from the McKell Institute, a progressive think-tank.

This isn’t part of a global trend. In the US and Canada, middle-class incomes have risen since the GFC and are continuing to rise, whereas incomes in Australia are in reverse gear. The McKell report says the average Australian annual income has seen a 2.7 per cent reduction since 2012, and concludes that wage growth will stall in the coming years.

“Currently, the average weekly wage for an Australian is $1,145.70. However, this is expected to only grow in real terms to $1,243 per week by 2020. This growth is incredibly slow by Australian and international standards alike, and highlights the threat to the continuation of Australia’s middle-class standard of living,” says the report.

Labor leader Bill Shorten, commenting on the figures at the McKell Institute on Thursday, says: “We must begin by recognising existing insecurities and frustrations are not imagined, or insignificant. Millions of Australians are working harder and longer than they did a decade ago – but have less to go around each week.”

Rising levels of financial stress due to stagnant wage growth manifest most visibly in personal debt default, negotiated compromises with creditors and bankruptcy. 

Financial issues are the chief cause of stress and anxiety among Australians. The Stress and Wellbeing in Australia survey and the Australian Psychological Society both report increasing levels of stress and distress since 2011. It’s particularly evident among younger people who have been locked out of the property market and who are saddled with high levels of debt after completing a university degree.

These tensions and anxieties around financial insecurity naturally spill over into workplaces. While it’s helpful to be aware of the bigger context, what can human resources usefully do to alleviate workplace stress?

First of all, this is a health and safety issue and comes under the OHS Act. As such, employers are required to address workplace stress using a risk management framework.

Employee-focussed approaches such as counselling, relaxation training, time management skills and stress management training can help staff to develop greater resilience to deal with personal and professional anxiety.

Stress management programs usually teach people about the nature of stress and its effect on health while equipping them with skills to reduce symptoms such as sleep disturbances. They are also relatively inexpensive to implement. Mindfulness or meditation courses have also been shown – repeatedly – to have a positive effect on mood and anxiety.

There is still a great deal more that workplaces can do. A recent survey by MinterEllison shows that 56 per cent of respondents reported an increase in the number of mental health cases year-on-year, with the two most common issues being depression and anxiety. Despite this, a majority of participants said they don’t measure the impact of staff mental health issues in their organisation and 74 per cent lack formal and specific mental health policies or procedures.

Given that the Australian workforce is pulling its weight and driving economic prosperity, the demand for employers to start investing much more in the health and wellbeing of their employees grows ever louder.

4
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
John
Guest
John

Pretty darn basic – people don’t have the confidence to blow money.
The increased productivity is expected (it’s not a bonus), that’s why they are still at the office (instead of laid off).

Sandra De Kock
Guest
Sandra De Kock

I must be a bit thick but tell me again how the fact that people are earning less is suddenly a reason to roll out Health and Safety? There is evidence put forward that a counselling session is going to improve a workers income level or have I missed something important here?

Tasman McManis
Guest
Tasman McManis

The level of wages growth and salary budgets looks to be closely aligned with the increase in overall living costs. Perhaps we need to look more closely at the flexibility of our labour laws and the overall level of government regulation. It seems to me that we have become a very conservative nation that is resistant to change in many different areas of life. This inhibits our ability to adopt new ideas and to be nimble to the changing conditions in the world economy.

Joe Morrison
Guest
Joe Morrison

Australian workers have largely abandoned their trade unions. In the circumstances, it’s inevitable that they’ll lose ground over time without effective workplace advocacy. I would also say that unions have become less effective advocates in recent years and they need to refocus on their core business instead of internal politics and perks.

More on HRM