Why paying workers higher wages improves productivity

For years we have questioned Australian businesses’ extreme reliance on cheap, exploitable migrant workers, explaining that it has contributed to the nation’s chronically low wage growth, in addition to stifling our productivity by discouraging firms from adopting labour-saving technologies and automation.

Without easy access to low-paid migrants, firms would be forced to lift wages to attract local workers. In turn, these higher wages would encourage firms to seek out labour-saving technologies and automation in a bid to lower their labour costs, which would ultimately lift the economy’s productivity.

Higher wages further improves productivity by encouraging the least productive businesses to lose people, shrink and go bust, transferring workers, land and capital to more productive businesses.

There are 1105 words left in this subscriber-only article.

Start your free 14-day trial today!

Comments are hidden for Membership Subscribers only.