How YOU can get a $3000 pay rise as treasurer reveals the business decision that would lead to an increase in the wages of their staff
- Treasurer urges businesses to spend on new technology not share buybacks
- Productivity rise of just 0.4 percent could spark a pay rise for workers of $3000
- Too much mass migration is weighing down wages and productivity, expert says
- Innovative sectors ignored for resource exports and finance sector: economist
Workers could earn $3000 more on their average annual incomes if productivity growth rose by just 0.4 percent, Treasurer Josh Frydenberg said on Monday.
The average full-time adult worker earns $1633.80 per week according to the Australian Bureau of Statistics (ABS) key figures for May, or just under $85,000 per year.
Treasurer Josh Frydenberg said this could rise by more than $3000 by next year if productivity could be lifted.
Treasurer Josh Frydenberg said average annual salaries could rise by more than $3000 by next year if productivity can be lifted by 0.4 percent
'Should we get our average annual productivity growth from 1.1 percent back to 1.5 per cent, then annual incomes per person will be over $3000 higher by the end of the decade,' he said in a speech to the Business Council of Australia in Melbourne.
'GDP growth and real wages will also be 4 per cent higher and the economy $70 billion bigger overall. That is a lot to play for.'
Productivity growth is an improvement in efficiency in work or production, meaning each worker produces more output.
It can be achieved when work systems are upgraded with new machinery or technology to make people more productive, or when staff are trained to do their jobs better, or when they simply work more hours.
Australia's labor productivity growth stretching all the way back to June 1979 shows it has been as high as 6.24 percent and as low as -3.92 percent. It's now hovering around 1 percent
Frydenberg said the way for Australian businesses to achieve productivity growth was for businesses to use cheap interest rates to spend money on new technology rather than to finance share buybacks.
'Share buybacks and capital returns are becoming increasingly prominent and the default option for corporates. But is a buyback always the best option for the future growth of the company and therefore the economy?' he said.
Australia's Productivity growth in Australia is now oscillating around 1 percent.
Labor productivity growth, calculated GDP, earnings and employment figures provided by the ABS, has been as high as 6.24 percent in March 1984 and as low as -3.92 percent in June 1986.
Wage growth has also been disappointing in recent years with salaries up just 0.53 percent for trend figures in the June quarter according to the ABS.
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Higher productivity means higher wages but experts warned the problem is not simple to fix. Mass migration is weighing down wages and productivity according to Macrobusiness, while dependence on resource exports at the expense of investing in innovation is also a problem
Economist Martin North of Digital Finance Analytics said the problem would not be easy to fix.
'The problem is deep seated and is because we have not invested in innovative sectors, preferring an old model of resource exports and finance sector growth,' he told Daily Mail Australia.
David Llewellyn-Smith who writes for respected economics blog Macrobusiness, has warned that mass migration is putting downward pressure on both earnings and productivity.
'Students, visa holders, tourists all work for nothing to gain longer terms visas,' he wrote in July.
'Their numbers are endless and so is the labour supply shock,'
'Thus everybody can get some work, nobody can get enough of it, participation skyrockets but productivity craters. Wages can't rise and the economy spirals, literally, into a dumbening singularity.'
