Concerns raised about economic growth in Australia ahead of G20 summit

by Ray Clancy on November 13, 2014

in Australia, Money, Business and Finance

The world’s eyes will be on Australia this weekend as the latest G20 summit is held in Brisbane amid concerns about economic growth in the country.

A new analysis shows wage growth in Australia has reached a 17 year low, raising concerns about a prolonged period of stagnation in real living standards.

globalECONOMY

Concerns are developing over the growth rate of the Australian economy

The research, released by the Australian Council of Trade Unions (ACTU), shows wage growth has slowed in all industries in Australia, reflecting a weaker labour market with higher unemployment and slower employment growth.

It says that the slowing in wages growth reflects a weaker labour market, with higher unemployment and slower employment growth.

Overall, the Wage Price Index (WPI) grew by just 2.6% over the year to the June 2014 quarter, the slowest wage growth in the 17 year history of that series.

2.6% wasn’t enough to keep up with inflation, as the CPI rose by 3% over the year to the June quarter. This is only the second time real wages have fallen since the creation of the WPI, the report points out.

A breakdown of the figures show that wages in mining rose by only 2.5% over the past year, compared to an average of 4% over the past 10 years. The fall in wages growth was even larger in professional, scientific and technical services, where wages rose by 2% over the past year rather than the 3.8% decade average growth.

Wage growth has slowed considerably in both the private and public sectors and the report says there is no pocket of rapid wage growth ahead, as all industries have seen growth slow to below its 10 year average.

‘It’s not the case that overall wage growth has slowed, while some industries continue to record strong growth. Only a tiny minority of firms, a little over 1%, have recorded wages growth for their employees of over 5% in recent years, while the proportion of firms paying wage increases of 3% to 5% has fallen from about 32% over the decade to about 23%,’ the report explains.

‘Rising unemployment has been accompanied by slowing wage growth and if anything, the pace of wages growth has slowed a little more than would be expected given the unemployment rate,’ it says, adding that the last time unemployment was around current levels in 2004 private sector wages were growing at 3.4%, rather than the current 2.4%.

The ACTU concludes that Australia is on the wrong track for economic growth and is calling for inclusive growth, increased wages and targeted spending.

The G20, which consists of the governments and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the United States and the European Union, meets regularly.

The G20 economies account for around 85% of the gross world product, 80% of world trade and two thirds of the world population.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: