The share of Australian gross domestic product going into workers' pockets has hit a record low, according to a new report.
The Australia Institute analysis shows the 46.2 per cent share of GDP in the March quarter was the lowest recorded since the Australian Bureau of Statistics started collecting the data in 1959.
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No chance wages will suddenly pick up
The economics text book on wages is wrong; there are a number of reasons why wages growth will remain subdued. Michael Pascoe comments.
It comes as Australia grabbed the record for the longest run of uninterrupted growth in the developed world from the Netherlands last week, recording its 103rd straight quarter without going into a technical recession.Â
Jim Stanford, economist and director of the Australia Institute's Centre for Future Work said the relationship between growing GDP and growing labour compensation has been weaker in the past year than at any other time on record.
He said new figures confirmed the growing gap between economic growth and workers' pay packets.
"Just 9.9 cents out of each dollar in new GDP created in Australia over the last year went into labour income," he said.
"The labour share of GDP has declined rapidly in recent months, thanks to the stagnation of wage payments despite relatively robust increases in GDP.Â
"Over the year that ended in the March quarter, Australia's GDP grew by $31.7 billion. But less than one-tenth of that ($3.1 billion) was reflected in higher compensation for Australian workers."
Dr Stanford said policies including stronger minimum wages and protection of penalty rates were needed to stimulate wage growth and reverse the decline in workers' share of GDP.
"These findings indicate the need for a systematic effort by policy-makers to rebuild and modernise the institutions that regulate income distribution," he said.
"There is no reason to believe any more ... that economic growth alone will lift all boats and automatically trickle down into wages and salaries for working Australians."
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